Asset Class	Ticker	5 Day Return
Alternative
Gold	GLD	17.64%
Commodities	GSG	-1.54%
Natural Resources	IGE	6.87%
130/30 Funds	JFT	1.69%
Hedge Funds	GARTX	3.10%
Master Limited Partnerships	BSR	-7.88%
Private Equity
US Private Equity	PSP	6.00%
Intl Private Equity	PFP	0.70%
Real Estate
US Real Estate	RWR	3.98%
Intl Real Estate	RWX	-1.74%
US Stocks
US All Stocks	VTI	0.00%
US Small Cap	VB	3.36%
US Micro Cap	FDM	6.03%
International Stocks
Intl All Stocks	VEU	0.90%
Intl Small Cap	GWX	3.75%
Emerging Market Stocks
Emerging Market Stocks	VWO	5.34%
Emerging Markets Small Cap	DGS	-4.44%
Frontier Markets Stocks	FRN	-3.52%
US Fixed Income
US Treasuries	ITE	-0.66%
Inflation Protected Securities	TIP	-0.99%
Tax-Free Muni Bonds	MUB	-3.77%
US Corp Bonds	AGG	-0.17%
US High Yield Corp Bonds	JNK	-2.87%
US Preferred Stock	PFF	-2.67%
International Fixed Income
Intl Treasuries	BWX	0.23%
Intl. Inflation Linked Treasuries	WIP	-1.89%
Emerging Market Treasuries	EMB	-6.30%

Tags: Greg, Asset Class

What asset classes are winning in 2008 as of Wednesday, August 13th?
1) +15.45% - Biotechnology (XBI)
2) +14.77% - Commodities (GSG)
3) -0.66% - Domestic Real Estate Investment Trusts (RWR)

What asset classes are losing in 2008 as of Wednesday, August 13th?
1) -21.16% International Real Estate (RWX)
2) -20.73% Domestic Listed Private Equity (PSP)
3) -19.39% Emerging Markets (EEM)

How are the broad markets as of Wednesday, August 13th?
Domestic: Stocks (SPY): -12.06% and Bonds (AGG): -1.22%
International: Stocks (EFA): -18.69% and Bonds (BWX): +0.20%
Emerging Market: Stocks (EEM): -19.39% and Bonds (PCY): -7.75%

Our Comments: An interesting trend has emerged within the markets in the last few weeks. We're finally seeing some strength from the dollar and weakness in commodities. This trend change is matched by a strengthening of domestic stocks and a dramatic decline of the foreign stock markets.

Most importantly in our minds we have seen great strength from Micro Cap. This may be signaling that the US markets are out of the woods. We are well aware that things are looking better for the domestic markets.

While the US economy is facing significant challenges in some industries not all is doom and gloom. We must always remember that the markets are a leading indicator and they seem to be indicating things will begin to improve.

Tags: Greg, Asset Class

It’s scary to think about, but I've had a few people ask me about the strength of their banks and if their cash was safe. Am I personally worried about mass bank failures? No, not at all. We are in the business of managing risk and therefore without trying to scare anyone, I thought it would be helpful to address ways to limit your risk in the event of a bank failure. What I am telling most clients is that if you have over $100,000 in cash equivalents at one bank, consider putting the rest into Treasury Bills. Read the following quote taken from the FDIC website:

"Customers who purchase T-bills at banks that later fail become concerned because they think their actual Treasury securities were kept at the failed bank. In fact, in most cases banks purchase T-bills via book entry, meaning that there is an accounting entry maintained electronically on the records of the Treasury Department; no engraved certificates are issued. Treasury securities belong to the customer; the bank is merely acting as custodian.

Customers who hold Treasury securities purchased through a bank that later fails can request a document from the acquiring bank (or from the FDIC if there is no acquirer) showing proof of ownership and redeem the security at the nearest Federal Reserve Bank. Or, customers can wait for the security to reach its maturity date and receive a check from the acquiring institution, which may automatically become the new custodian of the failed bank's T-bill customer list (or from the FDIC acting as receiver for the failed bank when there is no acquirer)".

It’s not time to panic, but it is time to take a step back and evaluate your positioning. What I would suggest is that you take note of how your money is positioned so you can evaluate the potential risks. Take a look at how you hold your cash, the stability of your bank and your needs for the cash you have in savings. If you have any questions please let me know.

Also be sure to visit this link to the FDIC website. It explains how their insurance works in greater detail: Click Here

Important Disclosure

Tags: Greg, Cash

What asset classes are winning in 2008 as of Tuesday, June 10?

1) +33.24% - Commodities (GSG)
2) +11.89% - Natural Resources (IGE)
2) +3.10% - Domestic Real Estate Investment Trusts (RWR)


What asset classes are losing in 2008 as of Tuesday, June 10?

1) -10.97% International Real Estate (RWX)
2) -10.64% International Listed Private Equity (PFP)
3) -9.31% Domestic Listed Private Equity (PSP)


How are the broad markets as of Tuesday, June 10?

Domestic Stocks (SPY): -7.00%
Domestic Bonds (AGG): -1.22%

International Stocks (EFA): -7.01%
International Bonds (BWX): +0.82%

Emerging Market Stocks (EEM): -6.17%
Emerging Market Bonds (PCY): -0.32%


Our Comments: In the last 30 days we have seen the return of volatility to the markets. Oddly enough, there has been strength from micro cap (FDM). Since our last email it's only down -0.24% and considering the S&P 500 (SPY) has fallen -4.62% during this same period, that's quite remarkable. Historically micro cap and small cap has led us out of recessions, so if we are in a recession those are the asset classes that may signal a recovery.

If you go back 10 years (June 6th 1998) and take a look at the S&P 500 (SPY), the market appreciation is only 24%. That's an average annual return of 1.89% over that 10 year period. With S&P 500 having a long term annualized return of 10% to 12%, we've got a significant deviation from the mean return. So what does this mean? We feel that US stocks are due for a rally in the next few years.

Just as the emerging markets quietly started their charge towards the tail-end of the dot com boom, we feel that towards the tail-end of this commodity boom US stocks will start their next upward move. In the last week, almost every asset class has gotten killed. However, there has been surprising relative strength from the S&P 500, which is a rare occurrence. We'll be watching for a consistent trend change.

What do we do with this information? For one, we don't try to anticipate what's going to happen in the short run. Our firm studies very long-term trends and tries to build portfolios that do well through them all. Currently, our average University Endowment Styled Portfolio is up in 2008 (0.84% after fees). Our portfolios are generally globally diversified so we just need one of the markets to improve for performance to kick up. We are constantly researching how to make our portfolios more stable without sacrificing return. Our historical research is designed to help us understand how to make those improvements.

Important Disclosure

Tags: Greg, Asset Class

We follow about 25 asset classes. Of those, here is what we're seeing in 2008:

What asset classes are winning in 2008 as of Friday, May 16?

1) +28.86% - Commodities (GSG)
2) +14.58% - Natural Resources (IGE)
2) +10.85% - Domestic Real Estate Investment Trusts (VNQ)


What asset classes are losing in 2008 as of Friday, May 16?

1) -4.76% Domestic Listed Private Equity (PSP)
2) -4.12% Domestic Micro Cap Stocks (FDM)
3) -3.46% International Listed Private Equity (PFP)


What about the broad markets?

Domestic Stocks (SPY): -2.17%
Domestic Bonds (AGG): +2.05%

International Stocks (EFA): +1.08%
International Bonds (BWX): +6.39%

Emerging Market Stocks (EEM): +3.19%
Emerging Market Bonds (PCY): +0.94%


Our Comments: Predicting the short term movement of any asset class is similar to predicting the weather, but over the long run we can be quite certain of their return. Therefore, the historic performance of an asset class gives us the best guidance for long term future returns.

We know that the long term returns of commidities are about 10%. When they outperform this rate for a period of years we should remind ourselves that they will have to eventually go through a severe correction to revert to their mean returns.

While we often include an allocation to commodities in clients' portfolios, we are well aware that the odds of a severe downward correction are increasing. Earlier this year we were rebalancing into real estate and domesitc stocks (at the time they were underperforming); now we are evaluating reblancing into underperforming classes like private equity and micro cap. This helps us manage the risk of our portfolios and ensures that we are selling high and buying low.

Important Disclosure

Tags: Asset Class, Greg

While venture capital fundraising is off this year (down to 18.8 form 21.3 billion), private equity money keeps pouring in from the institutions. With major players Apollo and Carlyle able to build funds around 10 billion in size, funds raised for private equity have reached $199 billion. This is $35 billion more than the same time last year.

Looks like a good time to be a business owner trying to sell to private equity. It also reminds me of the tech bubble where the greatest cash inflows came in the four months before the crash.

Tags: Greg, Asset Class