Year to Date Portfolio Update
Previously I had not counted gold bullion into the total of all investment accounts, but it makes sense to do so. As of February 29, 2008, the accounts consist of the following asset allocations: 1. cash 19.3% (money market funds and the cash balances of mutual funds). 2. Bonds 50.9% (includes the bond holdings of VWIAX, RPSIX, LSBDX, PCRIX and HSTRX and short term municipal bond funds). 3. stocks 19.9% (includes the blue chip stock portions of VWIAX and RPSIX, the metals and energy stock holdings of HSTRX and VGPMX and VGENX, plus all the oil and gas royalty trusts, plus PCRIX and GCC) 4. gold (bullion) 9.9%.
Two thirds of the stocks should be considered "inflation hedges" plus the gold, together totaling 23% of the total portfolio assets. That's a little high, and I may cut back a bit as the inflation hedges are more volatile than the rest and have had a big run. However, I'm "bullish" on inflation for the long run, so this will only be a minor "trim".
Year to date this portfolio, including dividends, is up 3.26% which, if continued, would give 19.56% for the year. I'm not counting on that. The Vanguard Admiral Short Term Bond index (VBIRX), with a duration of 2.5% (close to mine), is up 2.99% year to date. The Vanguard Admiral SP500 Fund (VFIAX) is down 9.06% year to date. Gold is up 16% year to date. Gold is thus responsible for 1.6% of my total gains and therefore 50% of my total gains. This is a good hedge. But if we look at the trade-weighted US Dollar Index, it is down 3.9% on the year. So in effect I have lost 0.64% in purchasing power year to date. Hmmmmmmmmm...maybe I'll keep all the hedges after all.
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