The world waited for the results of the Greek election through the beginning part of June, The election turned out to be less of a decision point than many people expected.
The three bond ETFs in the portfolio are down just a bit of money, losing a total of .46% since we purchased them on June 1st.
The slight loss is the result of the overall bond market falling a bit. The last two weeks has seen the markets move into “risk on” mode. The “Risk On/Risk Off” model has been an important part fo the markets since the crisis of 2008.
During a “Risk On” phase, Stocks and foreign markets do well. The “risk on” refers to how people are putting trading risk on in their portfolio and positions.
During a “Risk Off” phase, bonds and the U.S. Dollar do well. People take off risk from around the world and put it into safe haven assets like the U.S. Dollar and U.S. Government Bonds.
Since the first of June, the markets have been in a “risk on” phase. Despite this, our portfolio is down just a bit – not even ½ of a percent.
This system has always been about low volatility and safe money. It’s about keeping your money safe, first and foremost. There was a huge reason to try and keep your money safe this month – the elections in Greece.
Nobody knew exactly how these elections would turn out, and the elections had the potential to rock the market in a terrible fashion. The fallout from the elections turned out to be far less volatile then it could have been, but there was a potential for upsets and a corresponding massive drop in the market.
There are rumors of more U.S. Federal reserve action happening soon, and this time I expect very aggressive bond market purchases from the Fed. If this announcement happens in the next few weeks, expect a massive rally in our portfolio. Keep your fingers crossed – it would be a massive windfall profit for us just from being in the right place at the right time.
The current EZ ETF portfolio was well protected in the case of the worst, and keeping money safe is a big first step in making money in the long run.
June 2012 Performance
The overall June portfolio performance is down .46% as of the morning of June 18th, 2012.
The risk balancing has once again protected the EZ ETF portfolio. The portfolio balanced the risk by putting more money into TIP, the best performer out of the portfolio.
Here’s how each ETF has performed so far this month:
TIP: iShares Barclays TIPS (4-8yr): Up 0.12% Inflation protected government bonds have slightly rallied this month. A combination of less inflation worries and a slightly better economy are pushing this market very slightly higher. This is a low risk play, which was perfect for the possible disaster we were facing out of Greece
TLT: iShares Barclays Long-Term Trsry (15-17yr): Down 1.57% The long bonds (20 Year) area has fallen slightly due to the good news out of Greece. U.S. Treasury bonds have been making historic highs over and over again for the last several years – this ETF has been in a long term – and massive – bull market. Don’t count this market out yet. We could easily see gains with this ETF over the next few weeks.