September turned out true to historical form, as one of the weakest months for stocks, In last month’s report I said that there was a good chance stocks would test the August lows. The August lows were not only tested this month but broken causing even more pain for stocks this month and continued flight to safety into all sorts of government bonds. Lets take a look at the results in the dashboard below. I’m a little behind on this, with prices as of the close on Oct 4th, but it didn’t make too much difference.

In general, it was a repeat of Aug with stocks bad, bonds good. Long term gov’t bonds had a real ripper of a month with the TLT up over 10% for the month. That kind of move for bonds is extremely rare to say the least. Year to data, grab a chair if you need to, TLT is up 32%. Munis also performed well for the month. Corporates, high yield, and emerging market bonds declined as investors sought safety. Munis are still attractive here.

As for stocks, everything was down. Emerging markets led the way with a decline of 17% followed by Europe and then the US. Dividend ETFs did a bit better but still were down significantly. I must say that IDV is starting to look very interesting at these levels. Some of the individual counties, like Germany (EWG), also look attractive. BTW, if you think the US market is volatile check out the volatility in EWG. In the high yield sector ETFs, IYR, REM, and IYZ got crushed. Personally, I think REM is oversold here but IYR was long due for a major correction and now its happening. Utilities, XLU, held up the best and MLPs, AMZ, also held up relatively well.

That’s about it for this month. This remains a trader’s market. In fact, I’ve never seen a market more geared towards traders. That doesn’t mean its easy to trade and make money but the market is clearly not geared towards investing. There is definitely a lot of value in stocks but short term that doesn’t mean that they can’t go lower. I’ve geared my portfolio towards more trading with less long term positions until there is more clarity. October historically has been a pretty good month for stocks. We’ll see.

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