July 2023 Portfolio Review

Great month personally (5 weeks in Europe!) but tricky for the portfolios - mostly great up until the past week, then a big slide.. Only two positive portfolios for July, both traditional ones, and traditional ones won the month and lead overall. Meanwhile, the Qian portfolio continues to sink.

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A great reminder this month that start and end dates make a huge difference. Naturally, I like to run the numbers after the close of the last day of the month, but August 1st of this month found me at an osteria in Rome dining on porchetta and eggplant caponata, so that didn’t happen. Finally had some time to do the work a few days later in a hotel room outside Frankfurt after our flight got delayed (47 hour journey door-to-door!), so ran the numbers after closing on Friday the 3rd. Normally not a big deal - but the first few days of August was one of the worst stretches in recent months, and had a big impact on the portfolios. I can’t say exactly, but it seems to be a 2 to 3% difference in each one, and enough to turn a good month bad.

That’s the way it goes sometimes, and since the mission is to compare them with each other, it was the same bad news for everybody and evens out in the end. Our big winner this month was the 100% Equities portfolio (+.97%), followed by the 80/20 (+.3%), and those two were the only portfolios in positive territory. The big loser was the Qian portfolio, down 4.8% due to its heavy bond allocation, and actually, I’m starting to fear if that one will survive. It’s now down 35% overall, even after what has been a strong 2023.

On the asset level, small-cap value shined in July. AVUV, my preferred ETF for this segment, 6.9%, and then TNA, a 3X leveraged version which also invests in small-cap growth stocks, was up 10.6%. Other winners for the month were GDLC, the cryptocurrency grab bag, up 10%, and commodities up 7.4%. Bad beats for July were anything related to long duration Treasuries: TMF down 21.7%, EDV down ten and a half, and VGLT down 6.9%. Definitely a bad month, but on the other hand, you can also view this as a real buying opportunity. Rebalancing was triggered in four portfolios, where the rules dictated selling off equities to scoop up cheaper bonds. Theoretically, that should pay off down the road (but when, I have no idea).

Outside of that, rapidly dropping inflation seems to me to be a huge story, and for all the sturm und drang in the popular media about inflation’s rise, its remarkable how little attention is being paid to its fall. The figure for the previous 12 months came in at 3%, essentially saying that there hasn’t been any month-to-month inflation in a while, and that 3% is still just an artifact of what happened last fall. I’m interested to see if and when that number hits 2%.

Lastly, another loser month for Risk Parity fans, or people who want to see clear evidence that RP portfolios are superior to their traditional counterparts. The top three overall are the 100% equities, the 80/20, then the 60/40. Do keep in mind that it’s early. I’m interested in decades of performance, so two years in still isn’t even the finish of the first quarter.

Monthly Results:

Monthly Results for July 2023

Cumulative Results:

Overall Performance as of July 2023

Asset Performance:

Asset Performance, July 2023