The Year in Review: Performance updates from Cabana’s CEO – January 2, 2018

Market insight and a highlight of Cabana’s year-to-date performance:

Cabana’s six portfolios range from “Conservative” to “Aggressive” and include an income strategy portfolio. Performance is as of December 31, 2017 and is presented net of maximum advisory fees and commissions.

Happy New Year to our family, friends, clients and partners! Below is a high-level overview of what we saw in the market and in our portfolios in 2017. We look forward to what the next year will bring!

All Cabana Portfolios closed a great 2017 with gains in the month of December. I discussed the “Goldilocks Scenario” several times this year and I feel that it cannot be over emphasized. A “Goldilocks Scenario” occurs when we have an uptick in equity earnings as well as GDP growth, while bond yields remain subdued. Thus, equity assets rise in value at the same time that fixed income assets rise in value.

These asset classes are generally inversely correlated and it is unusual to have both move up together for such an extended period. I believe that much of the bond market’s resilience is due to the Federal Reserve forecasting rate hikes in 2016 and investors subsequently pricing in rising rates at a faster pace than what occurred. The political uncertainty here in the United States may have also benefited all markets by holding interest rates down at the back end of the yield curve. The Ten-Year Treasury Note ended the year right where it started. This lack of “yield premium demand” has likely caused the Federal Reserve to take a more dovish position on rising rates at the short end of the yield curve. Continued low rates across the curve have benefited our fixed income and low beta positions. Our dividend stocks, REITs and bonds have done well. Low rates have also caused the US Dollar to pull back consistently throughout the year. This has helped our international investments, especially those that are commodity producers. US mega-cap and multinational stocks have likewise been the beneficiaries of a falling Dollar as their goods have become more competitive with those of foreign companies.

The end of the year saw some buying in the commodity space for the first time in several years. Part of this may be due to a weaker US Dollar, but I think it is mainly due to worldwide growth finally taking hold. Along these lines the Transportation Index is up 8% over the past six weeks. Energy is up 7%. Copper was up 10% in December alone. At the same time, Financials are the strongest sector in the S&P 500. This suggests that growth is out there and that rates are on the way up. Look for the Ten-Year Treasury to test 2.62. If it breaks out there, we may see a yield of 3.00. While rising rates can certainly negatively impact growth, we are a long way from that. It seems to me that sustained worldwide growth, thereby resulting in a more normalized bond market would be a good thing. As always, we won’t make any predictions, but rather take it as it comes. We will continue to watch interest rates, earnings and the price action of the broad equity markets for objective information to drive our investment decisions. We remain bullish.

Thank you to our clients who work with our team every day to solve problems and protect hard earned assets. May everyone have a blessed and healthy 2018.

Year-to-date net-of-fees performance:


MODERATE: +18.41%

BALANCED: +20.74%

GROWTH: +17.99%



Performance is presented net of advisory fees and commissions (Conservative – Aggressive is presented net of 3% fees from January 1, 2017 – February 28, 2017 and 2% beginning March 1, 2017; Alpha Income is presented net of 2% fees)

-G. Chadd Mason, CEO

*Performance numbers indicated with (+) for positive return and (-) for negative return.




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