Perspective on Portfolio Performance, Market Performance

It has been a frustrating year for investors, as the markets have been up and down a lot and many of us are at about breakeven so far.  But my clients have been doing well compared to the benchmarks, and that is a high-priority goal I have for long-term investors.

For perspective, here are some Year-To-Date returns (through Friday) for comparison:

S&P500 (USA stock mkt)                                         +2.34%

PWS' 75-25 moderately-aggressive benchmark        -1.73%

Vanguard Target Retirement 2035 mutual fund         -1.74%

MSCI EAFE index (large foreign companies)           -9.36%

Barclays Aggregate Bond index (USA bond mkt)     -1.95%

The S&P500 is the biggest portion of the moderate through aggressive portfolios, but since it represents just the largest USA-based stocks, those portfolios have a lot of other components (small companies, foreign stocks, cash, bonds, commodities).

If you have any questions or concerns about what benchmark is right for you, or how your portfolio is doing compared to the benchmark, please let me know and we will discuss it and make sure you are invested the right way for you risk tolerance and investment goals.

Thank you.

--Gary Partoyan

Potomac Wealth Strategies, LLC

2018-11-17

Portfolio Model Returns Through 2018-09-30

US and Foreign Indexes 3 mo 1 yr 2 yr 3 yr 5 yr 10 yr 2008 Stock Markets (72-21-7) 5.2% 10.9% 13.7% 12.8% 8.8% 7.7% -41.0% S&P 500 PR 7.2% 15.7% 15.9% 14.9% 11.6% 9.6% -38.5% Dow Jones Industrial Avg PR 9.0% 18.1% 20.2% 17.6% 11.8% 9.3% -33.8% MSCI EAFE 0.8% 0.0% 7.7% 6.3% 1.7% 2.4% -45.1% MSCI EM -2.0% -3.1% 7.7% 9.8% 1.2% 2.9% -54.5% Barclays Agg Bond--US 0.0% -1.2% -0.6% 1.3% 2.2% 3.8% 5.2% Citi WGBI nonUSD (foreign bonds) -2.2% -1.6% -2.4% 2.4% -0.2% 2.0% 10.1% Aggressive (95% stocks-5% bonds) 4.0% 9.9% 13.0% 12.4% 8.1% 7.7% -38.9% 95 Strategic III 2.7% 10.5% 11.5% 12.3% 9.0% 10.5% -30.9% 95 Strategic USA II 4.8% 14.0% 14.4% 14.2% 11.0% 12.2% -25.8% 95 Strategic IV 2.3% 10.3% 14.7% 14.3% 9.7% 10.9% -33.5% 95 Schwab index 2017 4.7% 12.2% 14.6% 13.7% 9.9% 9.6% -34.3% 95 Schwab ETF 2018 4.9% 12.6% 14.8% 14.7% 10.3% Confluence Value Opportunities -0.2% 0.5% 9.9% 13.3% 12.5% -22.3% Confluence Equity Income 2.4% 7.6% 14.2% 11.0% 11.1% -18.9% WealthFront 9 3.2% 8.0% 12.1% 12.2% 7.5% 7.7% -38.1% American Funds Growth+Global 3.4% 13.2% 16.0% 14.7% 10.3% Moderately Aggressive (75-25) 2.9% 7.4% 9.0% 8.9% 5.9% 6.2% -31.0% 80 Strategic II 1.4% 5.3% 10.9% 10.7% 7.2% 9.9% -31.2% 80 Strategic III 2.6% 9.5% 10.3% 11.2% 8.3% 9.9% -27.7% 80 Strategic IV 1.9% 7.8% 11.7% 11.8% 8.2% 9.8% -29.2% 80 USA tilt 1.8% 6.9% 11.1% 10.6% 7.5% 9.4% -28.5% 80 Schwab index 2017 4.0% 10.2% 12.2% 11.4% 8.3% 8.3% -29.1% 80 Schwab ETF 2018 3.9% 9.5% 11.4% 11.7% 8.4% Money 75 2.6% 9.4% 11.9% 11.9% 8.5% American Funds Port Ser Gr+Inc 2.8% 9.0% 11.6% 12.0% 9.2% 8.9% -32.7% Moderate (60-40) 2.3% 6.0% 7.2% 7.5% 5.1% 5.7% -25.6% 60 Strategic III 2.1% 7.4% 8.2% 9.2% 7.0% 8.7% -23.3% 60 Strategic IV 1.5% 6.3% 9.5% 9.9% 6.9% 8.9% -24.7% 60 Schwab index 2017 3.2% 8.1% 9.8% 9.2% 6.9% 7.2% -23.8% 60 Schwab ETF 2018 3.1% 7.3% 8.9% 9.6% 7.2% American Funds Port Ser Moderate Gr+Inc 2.0% 6.2% 9.0% 9.6% 7.4% 7.9% -28.4% Moderately Conservative (40-60) 1.8% 4.4% 5.3% 5.7% 3.9% 4.8% -17.4% 40 Strategic III 1.8% 5.8% 6.3% 7.4% 5.6% 7.7% -16.8% 40 Strategic IV 1.0% 3.9% 6.4% 7.3% 5.2% 7.4% -18.5% 40 Schwab Index 2017 1.9% 5.1% 6.5% 6.2% 4.7% 5.5% -16.2% 40 Schwab ETF 2018 2.2% 4.8% 5.8% 6.7% 5.5% Hartford Balanced Income A 3.1% 3.1% 5.9% 8.4% 6.8% 8.7% -18.5% Conservative (20-80) 1.0% 2.5% 2.8% 3.6% 2.5% 3.7% -8.4% 20 Strategic III 0.9% 1.7% 2.7% 4.4% 3.3% 5.0% -9.3% 20 Strategic IV 0.7% 2.4% 3.8% 4.9% 3.7% 5.9% -11.7% 20 Schwab index 2017 1.4% 3.5% 4.0% 4.0% 3.3% 4.0% -9.2% 20 Schwab ETF 2018 1.1% 1.7% 2.6% 3.8% 3.5% NOTE 1:  Past performance is no guarantee of specific future results.  This data is presented by Potomac Wealth Strategies, LLC.  This data is from Morningstar and should be accurate, but it has not been independently verified. NOTE 2:  "Flex", "Strategic", and "Index" models are crafted/run by Potomac Wealth Strategies.  They show history of better returns, lower volatility, or both--or, with the Index models, closer tracking--vs benchmarks and competitors. NOTE 3:  "XX Schwab index" models are relatively low-cost and tax-efficient portfolios.  They are comprised mostly of index funds available free of transaction charges to my clients at Schwab.  This is what many might recommend due to low-costs and portfolio efficiency. NOTE 4:  Nothing on this blog post is specific investment advice to any individual or organization.  If the information hereon is of interest to you, please send e-mail to Info@PotomacWealthStrategies.com for a consultation.

2018-10-12 Gary's Thoughts On Market Pullback

Good morning.  The U.S. stock market (S&P 500) has gone down about 5.4% since it's high in late-September.  I recommend we stay the course with our long-term portfolios that use my asset allocation models.  Those models blend our investments in ways most suitable to our own risk tolerance.  If, for example, you're a moderately aggressive investor using the 80 Strategic IV portfolio model in your IRA, I recommend no changes to investments in that account.

I believe this is an overdue pullback (5% off of highs) or an occasional correction (10% off of highs).  I think this is an historically normal thing and not the start of a crash or bear market, as those types of events are usually correlated with (caused by?) economic recession, and our economy is generally pretty strong right now.

Thoughts on asset allocation vs. market-timing… S&P 500 has outperformed most other market indexes for longer than usual, and it is reasonable to expect it to underperform for a while at some point.   Market-timing would mean we try to guess when to get out and get back in.  Asset allocation means we stay invested and diversified.  The latter usually works out better over time, and there is Nobel Prize-winning research supporting the asset allocation concept.

I favor asset allocation and using one of my portfolio models, for most clients.  Please contact me if you want to schedule time to review your accounts and strategy.

Thank you, and make it a great day!

--Gary

Garo Linck Partoyan

Potomac Wealth Strategies, LLC

1800 Diagonal Road, Suite 600

Alexandria, Virginia  22314

Garo.Partoyan@PotomacWealthStrategies.com

(703) 746-8195 phone

(855) 347-9483 fax

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