Market insight and a highlight of Cabana’s year-to-date performance:
Cabana’s seven portfolios range from “Conservative” to “Aggressive” and include an income strategy and an “Accumulator” portfolio. Performance is as of market close on April 23, 2018 and is presented net of maximum advisory fees and commissions.
The Cabana Portfolios were mixed for the week. The Growth Portfolio was flat, while the Conservative Portfolio was down -1.40%.
Interestingly, our higher beta assets outperformed, despite an overall down week for equity markets. This is due to the surge in bond yields we saw almost exactly one week ago. The short-term effect has been a selloff in traditionally defensive assets like bonds, dividend payers and real estate. The bounce in yields eventually took down other equities as well. This is a minor replay of the events of early February. As soon as we noted that the broad equity markets had regained their 50-day moving averages and ten-year bond yields had stabilized in a range between 2.74% and 2.90%, the yields surged above 2.94% and touched 3.00%. This is the first time we have seen 3.00% on the ten-year bond since 2014. We discussed these rising yields earlier in the year and I will reiterate now that rising rates in and of themselves may represent a normalization of yields in response to demand-side growth and healthy inflationary forces – after a decade of prodding by the world’s central bankers. In fact, the sharp rise in the ten-year yield, which is controlled by the market, helps to steepen the overall yield curve. The curve has flattened significantly this year as a result of the Federal Reserve raising short-term rates and the backend of the yield curve failing to keep up. A flat yield curve is generally bad and a steep yield curve is good. The downside to all this is that market participants across the board are having to re-assess relative value among asset classes. So long as demand is strong enough to offset corporate borrowing costs and earnings increase, we all adjust to the “new normal” and the bull market lives on. However, if these input costs (along with commodities) are too much to overcome and companies’ earnings begin to suffer, the bull will stumble and fall. It is often rising input costs that end bull markets. We are in the middle of earnings season and markets are watching closely for answers to these questions. What is concerning to me is that stocks are selling off precipitously right after report of strong earnings. It could be that we have already seen the highs in this now nine-year-old bull cycle. For now, we remain cautiously bullish.
Year-to-date net-of-fees performance:
ALPHA INCOME: -1.61%
Performance is presented net of the maximum advisory fees and commissions (2%). Numbers indicated with (+) for positive return and (-) for negative return.
-G. Chadd Mason, CEO
By using this website and or blog, or making a purchase, user agrees as follows:
All written content on http://cabanaportfolio.com website (the “Website”) is for informational purposes only. The material presented is believed to be from reliable sources and no representations are made by CABANA, LLC (d/b/a “Cabana Asset Management”), Cabana Law Group, or Cabana Financial, LLC (collectively, “Cabana”) or its affiliates as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. No party, including but not limited to, Cabana and its affiliates, assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.
The views and opinions expressed are those of the authors do not necessarily reflect the official policy or position of Cabana or its affiliates. Any content provided by our bloggers or authors are of their opinion, and are not intended to malign any religion, ethnic group, club, organization, company, individual or anyone or anything.
Information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation.
Viewers or recipients of the information herein that do not agree with the term and conditions of use, should not utilize this website or any information contained herein. Decisions based on information contained herein are the sole responsibility of the person viewing the website. In exchange for utilizing the information on this website, the visitor agrees to indemnify and hold Cabana Asset management, its officers, directors, employees, affiliates, agents, licensors and suppliers harmless against any and all claims, losses, liability, costs and expenses (including but not limited to attorneys’ fees) arising from the use of this website, violation of these terms or from any decisions that the viewer makes based on such information.
Cabana Asset Management (“CAM”) is a U.S. Securities and Exchange Commission (SEC) Registered Investment Advisor (RIA) pursuant to the Investment Advisers Act of 1940 with headquarters in Fayetteville, AR. CAM’S internet communications are limited to the dissemination of general information pertaining to its investment advisory and financial planning services. Accordingly, CAM does not, and will not, effect or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. CAM may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Further written disclosure information contained in SEC form ADV Part II, including registration status, fees, and services, is available upon written request. Investment advice can only be rendered after the execution of Advisory Agreement between you and CAM and the delivery of CAM’s SEC Form ADV, Part II to you.
All performance returns are presented net-of-fees and include the reinvestment of dividends and capital gains. Benchmark comparisons are presented gross-of-fees.
Past performance may not be indicative of future returns. No current or prospective client should assume that the future performance of any specific investment or strategy will be profitable or equal to past performance levels.
All investment strategies have the potential for profit or loss. All strategies have different degrees of risk. There is no guarantee that any specific investment or strategy will be suitable or profitable for a particular client.
Historical performance results for investment indexes and/or categories typically do not show the impact of transaction and/or custodial charges or the deduction of an advisory fee, which may decrease historical performance results. There can be no assurances that a strategy will match or exceed its benchmark.
Some performance returns do not represent actual trading using client assets but were achieved through retroactive application of a model designed with the benefit of hindsight. Model returns have inherent limitations. Specifically, these returns do not represent actual trading and may not reflect the impact of material economic and market factors on the adviser’s decision-making if the adviser had actually managed the client’s money during this time frame.
Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that a portfolio will match or exceed any particular benchmark.
Cabana LLC manages assets on multiple custodial platforms. Performance results may vary based upon differences in associated costs and asset availability within the Cabana Model.