Following up my bond post, my Marketocracy equity accounts (left hand side of this blog) continue to do well. The long account is done according to “mutual fund” rules, the short account is “not compliant” but it is meant to be considered as part of a long-short fund where my neutral allocation is about 2:1 long to short equities. No ETFs, bonds, corporate preferreds, just strict individual stocks. Performance is net of fees.
Year-to-date, the long portfolio is outperforming the S&P by a bit under 1% (2.62% compared to 1.67%), and is still a shade under 7% annualized outperformance going back to mid-2001.
Year-to-date, the short portfolio not surprisingly is down 2.87%, and has a annualized outperformance of over 9.5% since 2005. Assuming an equal allocation to both long & short portfolios, then, an investor would be about break-even for the year, trailing the S&P500 by just under 2% in total. Not great, but a trailing performance that can be recovered from.
Of course, combining the equity portfolio with the below bond calls in, say, a 60/40 ratio would have the investor up just under 2.5% YTD, again ahead of the index.
Short-term equity market indicators remain bullish, but not greatly so, long-term equity valuation remains problematic. My bond themes remain in place, although short term rallies in long US bonds are possible as the Fed vainly attempts to hold down rates. Munis aren’t looking any better, and corporates aren’t anything special. Junk still has potential as credit eases, but absolute corporate yields are not that attractive.
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