Steve’s 2nd Quarter 2017 Portfolio Report

Steve’s 2nd Quarter 2017 Portfolio Report

I would be very happy if the current year-to-date (Y.T.D.) 4.5% return of my portfolio held for the entire 2017 year.

Since the beginning of 2017, the stock and bond markets have performed excellently for my boring and low-cost portfolio.

Bond Market: The Federal Reserve policymakers did the unthinkable. As predicted for years, they raised interest rates for the fourth time since December 2015 from .25% to a range of 1.0-1.25%! Take a look at the first table and you will see that the Vanguard Total Bond Market Index rose 2.41% YTD. Yet, for years the financial media and the talking heads warned again and again that bonds are going to CRASH! This is evidence that the bond market not only did not crash, it MADE ME MONEY! YTD 2.41% return is wonderful! Wellesley Income fund is made up of 65% bonds and 35% stocks and it went up 4.54% almost identical to my overall portfolio return.  There are a couple of places where absolutes are necessary and accurate: NEVER, EVER listen to the financial news for ideas for constructing or modifying your portfolio. Wall Street wants you to trade on every scary headline because that’s how the media and the “street” make money off of investors. Set up a simple lost coast diversified plan and stick with it.

Stock Market: Since the presidential election, the primary reason the market went up is that the Trump administration inherited a sound economy, good employment numbers, and a high stock market (Recall that Obama inherited a total and complete mess in 2008!). The pundits report that the market is anticipating lower corporate taxes, repatriation of the trillions in overseas financial institutions and less regulation. The pundits have been warning about high valuations but it has had no effect on the booming stock market so far. I agree that we are overdue for a correction or even a recession, but nobody knows how to accurately predict when and how it will occur. But one thing is certain, there will always (another absolute) be uncertainty, and the cause of the next stock market crash will be unpredictable.

I have been writing and preaching for years in my books and here on this blog–PLEASE DO NOT LISTEN TO THE FINANCIAL NEWS:  The media is NOT our friend for meaningful and objective data. It is emotional to scare us into doing something, and the data about the endless talk about individual companies is useless and dangerous because it has nothing to do with constructing a low-cost fully diversified portfolio with a stock/bond split with the bond allocation approximately equal to our age (My portfolio is 68% bonds because I will be 70 years old this month, July). Sensational news is what makes them money. Boring low-cost investment plans which require long-term thinking do not generate clicks and views. Unfortunately, the likes of Jim Cramer’s “Mad Money” generates millions of viewers and money for CNBC for well over a decade. I never, ever take Mr. Cramer’s advice on ANYTHING!

Set up a simple lost cost diversified plan and stick with it:. This is the primary reason why I have this blog, to share my plan so that you can construct your plan. My plan is for a 70-year-old retiree. My stock bond split is 30% stocks/70% bonds.

If you are a younger investor, you would have a higher allocation to stocks. Perhaps a 70% stock / 30% bonds or if in your 20s you can have 100% stocks, but they must be diversified among large, mid, small-cap stocks and international. Do not fret about value, growth, developed or developing countries. The Total Stock market index has both value and growth, large, mid and small-cap US domestic stocks, and the Total International Stock market index has both developed and developing countries.


This pie chart shows the percentage of each fund allocated, not returns. For example, my largest holding is the Vanguard Total Bond Market Index of 34% of my money.




  1. Inasmuch as your asset allocation matches the Wellesley Fund. Why don’t you place your entire portfolio in the Wellesley Fund. No need to watch and do re-balancing because the Wellesley does it for you.

    • Yes good questions, as there is overlap with my other bonds and equity holdings.

      Three reasons:
      1. I use it to tilt towards large cap domestic value
      2. I needed a separate fund for my Roth IRA.
      3. I want international equities, is why I don’t put the entire portfolio in it.

  2. Most veteran investors try to eliminate paperwork—-you apparently like the clutter.

  3. Thanks Joel, you gave me an idea! I will insert an additional reason #4. “Clutter”.
    As long as that “clutter” provide more diversification worldwide, I will enthusiastically take on more and more “clutter” as long as its low cost.

  4. Boy, do you ever tell it like is Steve. As former President of an RIA firm who has a J.D. degree; I’ve done a fair amount of plaintiff’s recovery work as an expert witness until my recent retirement.
    Your book Fighting Powerful Interests lays bare the inner workings of the insurance industry, It’s the most truthful account I have ever seen in my 27 years in the financial services industry. Teachers everywhere should know of and appreciate your two person consumer crusade. Please put me on your mailing list for updates,

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