“I do the opposite to what I feel I should do. When I’m feeling sick in my stomach, it’s time to buy. When I feel great, it’s time to sell” – Elaine Gazarelli, Wall Street analyst.
Where are we, at the end of February?
We can look back on February now as the month where we finally got some sort of selloff, after approximately two years of a steady, low volatility, upward march that made everyone feel great, month after month after month. It is just not natural when stocks always seem good and safe and predictable and nothing can go wrong. I’ve reminded people that we had not had a 10% selloff since January 2016, while we SHOULD average one such event every calendar year. The markets were finally up so much in January, upwards of 5%, it almost seemed like a blow-off of sorts. Now things feel a little more normal, and we finally have some honest, healthy “sick in my stomach” feelings out there.
In any case, there is still no evidence of the markets unwinding into a full bear market, which generally requires a period of many months to materialize. Eventually, barring something I am not able to see, this correction SHOULD resolve with the markets again seeking some new highs. It may require some weeks or even a few months – we’re never privileged to know the time frame.
Fortunately, most of us are still in a comfortable position of profit for the year to date, although practically every fund, bond or stock, was down in February.
How Did the Markets and our Funds Do in February?
All index and fund returns are courtesy Morningstar.com.
There was a definite divergence among the indices, with tech doing best (we have over-weighted tech for a long time – ONEQ and FTEC). The worst of the indices was the NYSE composite which is the index that most closely represents ALL stocks. The US aggregate bond index was down again, reflecting rising interest rates or fear of same.
As stated, we are defending against the interest rate problem with floating rate funds and our fixed Stoneridge fund.
Here are the index returns and our fund returns for the month of February:
|Morningstar Diversified Emerging Mkts||-4.10%|
|Russell 2000 (small co)||-3.97%|
|US Aggregate Bond Index||-0.95%|
|IEMG||-5.71%||iShares Emerging Markets||Fidelity commission free stock ETF|
|FQAL||-2.82%||Fidelity Quality Factor||Fidelity commission free stock ETF|
|ONEQ||-1.86%||Fidelity Nasdaq||Fidelity commission free stock ETF|
|FTEC||0.17%||Fidelity Info Tech||Fidelity commission free stock ETF|
|FHLC||-4.21%||Fidelity MSCI Healthcare||Fidelity commission free stock ETF|
|FMAT||-5.31%||Fidelity Materials||Fidelity commission free stock ETF|
|FIDU||-4.45%||Fidelity Industrials||Fidelity commission free stock ETF|
|FBIOX||-2.47%||Fidelity Biotech||stock mutual fund|
|FSMEX||-3.88%||Fidelity Medical Equipment||stock mutual fund|
|FCNTX||-2.29%||Fidelity Contra Fund||stock mutual fund|
|FBGRX||-2.26%||Fidelity Blue Chip Growth||stock mutual fund|
|CFRAX||-0.19%||Catalyst floating rate||bond mutual fund|
|FFRAX||-0.14%||Fidelity floating rate||bond mutual fund|
|RNDLX||-0.56%||RiverNorth Strategic||bond mutual fund|
|FNMIX||-2.11%||Fidelity New Market||bond mutual fund|
|FAGIX||-1.54%||Fidelity Capital & Income||bond mutual fund|
|LENDX||0.49%||Stone Ridge Alternative||peer to peer fixed return mutual fund|
|Prime Meridian Small Bus LP||0.60%||1 month lag||private peer to peer fixed return|
|Prime Meridian Real Estate LP||0.62%||1 month lag||private peer to peer fixed return|
|KIP, Kay Income Partners LP||0.56%||private mortgage fund|
Your investment return(s) for the month of February was/were as follows:
We should talk if you would like to review exactly where you stand or if we should consider a change. I am available at your convenience. I have Skype video in case you would like to do a video conference.
Darrell J Kay