Steady As She Goes (Up)

The Growth strategy has been unusually static as 2017 moves into its 8th month. The core portfolio hasn't changed, of course. No surprise there. I am looking at the wisdom of tweaking the core so that a global investing element always stays invested. At the moment, the core is comprised entirely of domestic (US) stocks. Still, the strong YTD performance of biotech (+23%) and technology (+30%) is enough to offset the more lackluster financials (+7.7%) and contrarian stocks (+5.6%).

Current sector overweights of asset managers (+15.6%) and technology (+34.8%) also keep this investor smiling.

For diversification, the portfolio owns a floating-rate bank fund that is up modestly (+2.7%), and some international funds that are also doing quite well. The global large cap (foreign) fund is up 17.7% YTD while the dividend oriented emerging markets exchange traded fund is up over 22% YTD.

The Alerian MLP exchange traded fund, which focuses on Master Limited Partnerships - mostly in the energy industry - is the laggard. Down thus far in 2017 (-1.4%), the energy focused value fund sports a current yield of over 10%, based on Morningstar's reported "SEC" yield. With 20/20 hindsight, I wish the model portfolio had more tech in it but at least the fund is paying investors a high yield while they wait. Most energy stocks are more dependent on the price of oil and gas staying high, or going higher. With the pipeline-oriented MLP sector, these companies should do well as long as the pipelines remain full. Since growing U.S. energy capacity is fueling the world's increasing demand for oil, the U.S. pipeline network is keeping plenty busy.

Overall the portfolio is up +12.65% year-to-date. While it is hard to imagine that the second half of the year will be able to repeat this kind of growth, for now the portfolio holdings are doing well so no changes are being made in the August 1 rebalance.

Still, the best thing that I can say about this market is that it has momentum. For the time being, there are a lot of buyers pushing it higher. All of our tactial signals are positive so we're fully invested in the tactical positions, for now. A couple of old timers in the industry have fired some warning shots across the bow of the record-setting bull market, however. Bob Rodriguez, former captain of the FPA Crescent Fund and multiple Morningstar-of-the-Year manager winner recently said that if he were still in the business, he'd have his fund 60% in cash. Oaktree Capital's Howard Marks penned a quarterly letter that was equally worrisome. Both of those gentleman have a history of being early. Unfortunately, they both have pretty good track records of being right in the long run.

This is a great market in which to be fully invested and scared to heck. That pretty well describes my current state of mind.