The Week in Review: Performance updates from Cabana’s CEO – August 7, 2018
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 August 6, 2018 and is presented net of maximum advisory fees and commissions (2%).
All Cabana Core Portfolios were up for the week. Our lower beta portfolios led the way, as international exposure continues to weigh on the other portfolios. The Alpha Income Portfolio was up 0.90% while the Accumulator Portfolio brought up the rear and was up 0.22%.
Domestic equity markets had a good week as strong earnings overshadowed the ongoing talk of trade war with our European partners and China. Foreign markets have not done so well and continue to sell off as their currencies are losing ground to the U.S. dollar. While a strong dollar represents the relative strength of the US economy, it is problematic for companies that export abroad – and especially difficult for international economies that are tied to commodities. All of this is very much related to the potential impacts of trade tariffs and is compounded by the fact that the U.S. is growing faster than other developed nations. Ultimately, the fact remains that the world economy is interconnected and long term growth here will require cooperation with and participation by other economies. In my opinion, we need other countries' equity markets to catch up for our market to continue to move forward. Do not forget – it is earnings that drive price and we need the whole world participating to maximize earnings.
Now for some good news. The S&P 500 is poised to test 2018’s January highs. This would formally provide a resumption of the bull market in stocks. At the same time, Dow Industrial and Transport indexes are breaking out to new post-correction highs. We have mentioned this “Dow Theory” indicator several times and it is now confirmed. On Tuesday of this week, there was a big bounce in China and a bounce in European stocks. While there was similar buying two weeks ago and it did not last, I am hopeful that all the pundits now suggesting the demise of those markets is an indicator that the selling is overdone. I am a big believer that if we hear about it on every channel the move is already over. We remain moderately bullish. Our COO Chris Carns likes to make fun of me and suggests that we change our bullish position from moderately bullish to “sheepishly bullish”. He is a funny guy, but I am sticking with moderately bullish for now!
Year-to-date net-of-fees performance:
ALPHA INCOME: +1.62%
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