First, I apologize for being about a week later than I would like for a month-end account performance and commentary. I lost about a week to the 4th of July holiday.
Last month I wrote about the seemingly contradictory market pattern. Among other things the small cap index was down over 2% while the Nasdaq (technology) was up over 2%. This month the Nasdaq was down while various other sectors were up. Consumer staples were great in May and in June they were down. Finally, biotech was down in May and then in June, it was up over 10%. Glad I did not sell. VERY VOLATILE!
All the different bond indexes were down but that is not entirely a surprise. We are battling rising interest rates which hurts bonds. However, our peer to peer lending fund (Stone Ridge LENDX) was up approximately 0.60%, which was great – exactly the outcome we hoped for.
My view, in summary, is that the bull market is still very much alive for stocks, although a correction (i.e. a downturn of maybe 5 – 10%) can easily happen at any time. Usually there is at least one correction every year and we have not had a meaningful correction since early 2016. However, I don’t see a correction as necessarily something to fear (or even something we are capable of avoiding), given the underlying positive supply/demand profile of stocks in general. Always remember that the proverbial “black swans” can fly over us at any time (think geopolitical). Meantime, we are staying invested.
Following are the various market averages I track, for the month of June, courtesy Morningstar.com:
| Stock Indexes | |||||||||||
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| Bond Index | |||||||||||
| US Aggregate Bond | -0.10% | ||||||||||
Our fund returns for the month of June were as follows (courtesy Morningstar.com):
| IEMG | 1.13% | iShares Emerging Markets | Fidelity commission free stock ETF |
| FQAL | 1.47% | Fidelity Quality | Fidelity commission free stock ETF |
| ONEQ | -0.98% | Fidelity Nasdaq | Fidelity commission free stock ETF |
| FTEC | -2.63% | Fidelity Info Tech | Fidelity commission free stock ETF |
| FDIS | -0.34% | Fidelity Discretionary | Fidelity commission free stock ETF |
| FSTA | -2.33% | Fidelity Consumer Staples | Fidelity commission free stock ETF |
| IEV | -0.53% | iShares Europe | Fidelity commission free stock ETF |
| FBIOX | 10.93% | Fidelity Biotech | stock mutual fund |
| FSMEX | 5.30% | Fidelity Medical Equipment | stock mutual fund |
| CFRAX | -0.76% | Catalyst floating rate | bond mutual fund |
| RNDLX | -0.14% | RiverNorth Strategic | bond mutual fund |
| FNMIX | -0.45% | Fidelity New Market | bond mutual fund |
| LENDX | 0.59% | Stone Ridge Alternative | peer to peer fixed return mutual fund |
| Prime Meridian Small Business LP | 0.73% | 1 month lag |
| Prime Meridian Real Estate LP | 0.67% | 1 month lag |
| KIP, Kay Income Partners LP | 0.56% |
I am building models to combine the above funds within several risk/reward profiles. Generally, the aggressive model is 100% stock, conservative 50% stock and two moderate models reflecting something between 70% and 80+% stock. The balance is a blend of bond and peer to peer fixed return funds.
Let me know if you would like to discuss your risk profile and investment model. I am available at your convenience. I have Skype video in case you would like to do a video conference.
Best,