Cabana’s seven portfolios range from “Conservative” to “Aggressive” and include an income strategy and an “Accumulator” portfolio. Performance below is as of market close on June 18, 2018 and is presented net of maximum advisory fees and commissions (2%).
All Cabana Portfolios were down for the week, consistent with the steep selloff in the broader markets. The higher beta portfolios were all down more than 2.00%. The Alpha Income Portfolio performed best and was only down 0.32%.
The trade tariff threats continue to pull equity markets lower around the world. The Dow is down almost 5.00% in ten trading days. The S&P 500 has not fared much better, but is holding at its 50-day moving average. The blue-chip Dow Jones Index has fallen all the way to its 200-day moving average. Foreign equity markets are in even worse technical condition. China is down 12.00% and emerging markets are down 8.00% over the past two weeks. Europe is also down 7.00%. Almost all equity markets are now under water for the year. The U.S. has held up better than the rest of the world, but the fact remains that the Dow is down 2.00%. The finance and tech heavy S&P 500 is clinging to gains of just over 1.00%. The Nasdaq, with its concentration of smaller companies and technology, has survived the best and is up 9.00%. Without the leadership at the Nasdaq this year, equity markets would be in a world of hurt. Bonds have not done any better due to rising rates during the first half of the year. U.S. Treasuries are down for the year, as are corporate grade bonds, real estate and gold. Commodities are still up but have pulled back 5.00% in the past month. If anyone is looking for a challenging investment climate, this is it.
Equity markets are at a critical juncture in my opinion. I believe one of two things is possible. The U.S. markets may bounce off key technical support and resume the uptrend that began at the end of May, thereby pulling international markets out of their current tailspin. This should result in at least one more leg up in this worn-out bull market during the last half of the year. Alternatively, they may break support and we head to the February lows and then some. I believe the Dow Index is the key. It is the most sensitive to the rising dollar and impact related to trade. We need it to hold its 200-day moving average now. If it falls, everything else is likely to follow. We remain moderately bullish until proven otherwise.
Year-to-date net-of-fees performance:
ALPHA INCOME: -0.48%
-G. Chadd Mason
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