Model Portfolio Performance Through February 2018

US and Foreign Indexes		3 mo	1 yr	2 yr	3 yr	5 yr	10 yr	2008
Stock Markets (72-21-7)		2.6%	16.2%	18.4%	7.5%	10.0%	5.4%	-41.0%
S&P 500 PR		2.5%	14.8%	18.5%	8.9%	12.4%	7.4%	-38.5%
Dow Jones Industrial Avg PR		3.1%	20.3%	23.1%	11.3%	12.2%	7.4%	-33.8%
MSCI EAFE		1.6%	17.0%	14.8%	2.8%	4.2%	-0.1%	-45.1%
MSCI EM		6.6%	27.6%	27.1%	6.5%	2.5%	0.2%	-54.5%
Barclays Agg Bond--US		-1.6%	0.5%	1.0%	1.1%	1.7%	3.6%	5.2%
Citi WGBI nonUSD (foreign bonds)		2.6%	11.2%	4.7%	3.7%	0.9%	2.0%	10.1%
Aggressive (95% stocks-5% bonds)		1.6%	14.3%	18.2%	7.1%	9.3%	5.6%	-38.9%
95 Strategic III		0.3%	12.0%	15.5%	7.4%	9.9%	9.0%	-30.9%
95 Strategic USA II		0.5%	12.0%	16.7%	8.4%	11.9%	11.1%	-25.8%
95 Strategic IV		2.1%	18.0%	20.1%	9.6%	11.2%	9.3%	-33.5%
95 Schwab index 2017		1.4%	14.7%	18.4%	8.3%	11.1%	7.7%	-34.3%
95 Schwab ETF 2018		2.1%	17.6%	20.4%	9.1%	11.5%
Confluence Value Opportunities								-22.3%
Confluence Equity Income								-18.9%
WealthFront 9		2.7%	17.1%	19.6%	7.5%	8.7%	5.6%	-38.1%
American Funds Port Ser Growth		4.4%	21.0%	22.4%	10.9%	13.8%	8.6%	-39.5%
American Funds Port Ser Global Growth		3.9%	23.0%	22.2%	10.2%	12.0%	7.2%	-40.3%
Moderately Aggressive (75-25)		0.3%	8.8%	12.6%	4.6%	6.3%	4.6%	-31.0%
80 Strategic II		0.9%	13.1%	17.0%	6.9%	8.9%	8.5%	-31.1%
80 Strategic III		0.3%	10.8%	14.0%	6.8%	9.0%	8.5%	-27.7%
80 Strategic IV		1.8%	14.9%	17.0%	8.2%	9.4%	8.5%	-29.2%
80 USA tilt		0.7%	11.2%	15.7%	6.5%	8.9%	8.2%	-28.5%
80 Schwab index 2017		1.3%	12.5%	15.2%	7.0%	9.3%	6.9%	-29.3%
80 Schwab ETF 2018		1.5%	14.2%	16.0%	7.4%	9.2%
Money 75		1.4%	12.5%	17.0%	7.5%	9.4%	7.4%	-32.7%
American Funds Port Ser Gr+Inc		2.7%	14.9%	16.8%	8.1%	10.7%	7.0%	-32.7%
Moderate (60-40)		0.0%	6.9%	10.3%	3.9%	5.3%	4.4%	-25.6%
60 Strategic III		-0.1%	8.5%	11.5%	5.6%	7.4%	7.5%	-23.3%
60 Strategic IV		1.2%	11.8%	14.1%	6.8%	7.7%	7.7%	-24.7%
60 Schwab index 2017		1.0%	10.1%	12.2%	5.7%	7.6%	6.0%	-23.8%
60 Schwab ETF 2018		0.8%	11.3%	12.8%	6.2%	7.8%
American Funds Port Ser Balanced		1.7%	12.5%	13.5%	6.6%	8.7%	6.4%	-28.5%
Moderately Conservative (40-60)		0.4%	6.0%	7.9%	3.3%	4.0%	3.8%	-17.4%
40 Strategic III		0.1%	6.6%	9.2%	4.5%	5.7%	6.7%	-16.8%
40 Strategic IV		0.7%	8.3%	10.4%	5.0%	5.6%	6.5%	-18.5%
40 Schwab Index 2017		0.5%	6.9%	8.1%	3.9%	5.1%	4.8%	-16.2%
40 Schwab ETF 2018		0.3%	8.1%	8.5%	4.5%	5.7%
Hartford Balanced Income A		-1.1%	6.3%	10.8%	6.0%	7.1%	7.5%	-18.5%
Conservative (20-80)		0.2%	3.6%	4.8%	2.2%	2.3%	3.1%	-8.4%
20 Strategic III		-0.5%	2.8%	5.4%	2.8%	3.1%	4.2%	-9.3%
20 Strategic IV		0.2%	4.9%	7.0%	3.3%	3.6%	5.2%	-11.6%
20 Schwab index 2017		0.5%	4.5%	4.8%	2.6%	3.4%	3.6%	-9.2%
20 Schwab ETF 2018		-0.5%	4.2%	4.6%	2.6%	3.4%
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.

Market Decline early-February 2018--Gary's thoughts

Good evening (2/5/2018, 11:37pm).  The U.S. stock markets were down around 7% over the past two trading days.  That's a sharp "pullback" the likes of which we haven't seen in longer than usual, and I want to put it into some perspective.

First, I am not worried about this so far, even if it continues for a while longer.  The market was running hot for many months recently, and it was going to have to cool off at some point, and the economy is pretty healthy overall.

Second, long-term investors should be patient, and short-term investors are usually exposed much less to the stock market anyway.  Here is a link to a post where I explain asset allocation, which is how I pursue the optimal balance of various types of investments in order to manage portfolio risk.

Some other thoughts I want to share:

·        Good economic data lately, no sense there will be a U.S. economic recession soon.

·        Bear markets (extended downturns that drop 20% or more from highs) are usually paired with economic recessions.

·        Pullbacks (5-10% declines from highs) are expected during market cycles.

·        Corrections (10-20% declines) are rarer but happen without necessarily indicating any major economic problem.

·        The FED is raising interest rates, but not too much or too quickly in my opinion.

·        Long-term investors are almost always better-off using a prudently-diversified portfolio and sticking with the asset allocation strategy, as it is rare that investors (even professionals) "time the market" effectively.

·        Here is a graphic offering some perspective on, for example, the S&P 500 index from 1996-2011 (spoiler:  probably best to have just stayed invested instead of timing the market and missing several Up days):

Stay tuned and I'll try to provide more insight.  Contact me with any questions about your accounts and asset allocation/diversification.

Thank you.

--Gary

Garo Linck Partoyan

Potomac Wealth Strategies, LLC

1800 Diagonal Road, Suite 600

Alexandria, Virginia  22314