One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute. William Feather
Where are we, at the end of June and half way through the year?
Last month I talked about the stock market being weird and unpredictable and that has not changed. This morning the markets were solidly up. Now the S&P and Nasdaq (technology) are down a half percent and the Russell 2000 (small companies) is up. The markets don’t like what’s going on with free trade. Small companies are less influenced by trade than large multi-nationals (and more influenced by other more favorable trends). The stock market is definitely vulnerable to going lower before it goes higher. However, I don’t see a bear market forming (major, major drop). Remember, as I’ve written before, a bear market is a process, not an event. Dodging corrections (declines in the 10% or so range) is exceedingly hard to do. Corrections are more event driven.
I have been making changes in the funds. We’re still heavy on the technology sector (no change there) but we’re now out of foreign stocks. They have truly fallen on hard times. I have also been adding small cap funds (IJR and PSAGX). I also removed long time holding FQAL, Fidelity Quality Factor fund, in favor of small cap. It’s exciting to see small company stocks do well, for one very important reason: it is a positive indicator for market direction. Small company stock prices typically lead the way lower when a bear market process is unfolding.
The Dow Jones average and the New York Stock Exchange Index are down for the year. The S&P is only marginally higher while the tech and small cap averages are very nicely up.
In conclusion: the bull market run is not over, and we should eventually see a resumption of new highs, in my opinion. Final point: the bond market is a bad place to be. Our fixed return funds have been focused on floating rates and peer to peer funds with stable principal. We are in the right place on fixed returns.
How Did the Markets and our Funds Do YTD and in June?
All index and fund returns are courtesy Morningstar.com. Here are the index returns and our fund returns:
|Russell 2000 (small co)||0.58%||7.00%|
|US Aggregate Bond Index||-0.12%||-1.62%|
|ONEQ||0.97%||Fidelity Nasdaq||Fidelity commission free ETF||9.10%|
|IJR||1.04%||iShares Small-Cap||Fidelity commission free ETF||9.31%|
|FENY||0.61%||Fidelity Energy||Fidelity commission free ETF||7.28%|
|FTEC||-0.24%||Fidelity Info Tech||Fidelity commission free ETF||11.12%|
|FHLC||1.65%||Fidelity MSCI Healthcare||Fidelity commission free ETF||3.96%|
|FBIOX||0.04%||Fidelity Biotech||stock mutual fund||8.65%|
|FSMEX||3.01%||Fidelity Medical Equipment||stock mutual fund||17.90%|
|FCNTX||0.92%||Fidelity Contra Fund||stock mutual fund||9.52%|
|FBGRX||2.49%||Fidelity Blue Chip Growth||stock mutual fund||12.51%|
|PSGAX||1.04%||Virtus KAR Small-Cap Gr||stock mutual fund||20.57%|
|FKDNX||0.55%||Franklin Dynatech||stock mutual fund||14.05%|
|CFRAX||0.01%||Catalyst floating rate||Fixed return mutual fund||2.30%|
|EIFAX||0.13%||Eaton Vance floating rate||Fixed return mutual fund||2.49%|
|FFRAX||-0.04%||Fidelity floating rate||Fixed return mutual fund||1.62%|
|GIREX||New fund, see next month||Fixed return mutual fund|
|RNDLX||-0.14%||RiverNorth Strategic||Fixed return mutual fund||-0.19%|
|FAGIX||-0.24%||Fidelity Capital & Income||Fixed return mutual fund||0.62%|
|LENDX||0.43%||Stone Ridge Alternative||peer to peer fixed return
|Prime Meridian Small Bus LP||0.59%||1 month lag||private peer to peer fixed return||2.89%*|
|Prime Meridian Real Estate LP||0.63%||1 month lag||private peer to peer fixed return||3.19%*|
|KIP, Kay Income Partners LP||0.56%||private mortgage fund||3.38%|
|* 5 months thru 5/31|
Your investment return(s) for the month of June was/were as follows:
Your investment return(s) for the year to date (YTD) 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.