● The Bogleheads’ Guide to the Three-Fund Portfolio: How a Simple Portfolio of Three Total Market Index Funds Outperforms Most Investors with Less Risk
By Taylor Larimore
Review via Morningstar
Three colors: red, white, and blue. Three funds: Vanguard Total Stock Market Index (VTSAX), Vanguard Total International Stock Index (VTIAX), and Vanguard Total Bond Market Index (VBTLX). According to author Taylor Larimore, those are all that an American investor needs.
All right, he doesn’t actually mention the U.S. flag. That was my addition, this being a July 4 column. However, Taylor’s new book, “The Bogleheads’ Guide to the Three-Fund Portfolio,” is less topical. It is intended to apply not only to each day of the year, but for many years to come. In that task, it succeeds. The publication is as timeless as anything that advocates specific funds can be.
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US companies expanded payrolls by 202,000 in June, the Labor Department reported today. The solid gain marks the second time in as many months that employment grew by more than 200,000.
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The yield spread for 10-year less 2-year Treasuries dipped to 29 basis points on Thursday (July 5), the lowest since August 2007. Will the Federal Reserve tempt economic fate with another rate hike that could push the 10-2-year spread into negative terrain, which would widely be interpreted as a warning that a new recession is near?
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US-China trade war heats up: Reuters
Trump scheduled to meet Russia’s Putin later this month: NY Times
US job cuts up 18% in June vs. May: CG&C
US Services PMI: growth remained strong in June: IHS Markit
US Non-Mfg Index: growth accelerated in June: WSJ
FOMC minutes: Fed eyes recession risk but is upbeat on US economy: Reuters
German industrial output rebounded sharply in May: FT
ADP: US private payrolls increased by moderate 177,000 in June: MW

Consumer discretionary stocks continue to lead US equity sectors for year-to-date performances, based on a set of exchange-traded funds through July 3. The former leader, technology, is in second place and has fallen further behind consumer discretionary in recent weeks.
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US vows to keep Persian Gulf open after Iran’s threats: AP
China says US ‘opening fire’ on world with tariff threats: Reuters
Trump issued new demand for world’s oil producers to stabilize markets: CNN
Police investigating new cases of nerve poisoning in UK: CNN
Employment growth continues to be overshadowed by wage stagnation: OECD
Factory orders in Germany rebounded in May, ending run of declines: Bloomberg
Eurozone economic activity picked up in June: IHS Markit
Factory orders in US rebounded in May after tumbling in April: Zacks
US auto sales increased in June for top carmakers: Reuters
Merger announcements rise to a record $2.5 trillion in first half of 2018: NY Times

The expected risk premium for the Global Market Index (GMI) ticked down in June to an annualized 4.8%, a fractional decline from the previous month’s outlook. The projected return over the “risk-free” rate is a long-run estimate for the index, which is an unmanaged market-value-weighted portfolio that holds all the major asset classes.
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Germany’s Merkel stays in power by compromising on migration: CNN
Trump and Mexico’s new president vow to work together: USA Today
Trump warns World Trade Organization of action if US isn’t treated fairly: Reuters
Trump warns NATO countries to spend more on defense: NY Times
Construction spending in US rose 0.4% in May: MarketWatch
ISM Mfg Index: US factory output up more than expected in June: Bloomberg
PMI: US mfg growth eased but remained strong in June: IHS Markit
Eurozone mfg growth dipped to 18-month low last month: IHS Markit
10 Tech stocks account for all of S&P 500’s gain in 2018’s first half: Bloomberg

Real estate investment trusts (REITs) in the US posted the strongest gain in June among the major asset classes. The gain marked a second straight month with securitized real estate topping the performance list.
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