The stock market is like a small row boat on a rough sea, bouncing around as it drifts, whereas the macro economy is like a large ocean liner, very ponderous and difficult to maneuver but without such a rough journey. Clive Granger
Rather than being distracted by the volatile moves in prices over the past two months, investors would be better served to focus on the forces of Supply and Demand behind these price movements – forces which continue to indicate an ongoing and healthy bull market with months more to run. Lowry Market Letter
Where are we, at the end of March?
There will definitely be a newsletter at some point in the future where I state that the market seems to be on a track that wants us to sell out – that a bear market is on the way. However, based on everything I’m reading and the underlying statistics that I see, we are still in a rather normal “correction”, meaning the kind of decline that may take a few months to resolve, but then come out of it.
Meantime it is clearly very ugly right now. The problem with trying to dodge corrections is that generally, the market is higher when it seems safe to return, than when we sold. Therefore, I try to avoid the major bear markets (which typically give us longer time frames to prepare) rather than corrections.
How Did the Markets and our Funds Do in March?
All index and fund returns are courtesy Morningstar.com.
Generally, our brokerage accounts were down somewhere between 1% and 2%, based on our weighting and fund selection. 401K accounts where we are restricted by account agreement to Fidelity funds only, were down more, since we don’t have access to certain funds I like for diversification.
I’ve made some fund changes. I moved the Fidelity Floating Rate fund (FFRAX) to the Eaton Vance Floating Rate fund (EIFAX), for performance reasons. And today (April 2) I moved the Fidelity Materials ETF (FMAT) to the Fidelity Europe ETF (IEV). This was for purposes of sector rotation.
The fixed funds did well in March, helping us with diversification – as they are intended to do.
Here are the index returns and our fund returns for the month of February:
|Morningstar Diversified Emerging Mkts||-0.70%|
|Russell 2000 (small co)||1.12%|
|US Aggregate Bond Index||0.64%|
|IEMG||0.81%||iShares Emerging Markets||Fidelity commission free stock ETF|
|FQAL||-2.33%||Fidelity Quality Factor||Fidelity commission free stock ETF|
|ONEQ||-2.91%||Fidelity Nasdaq||Fidelity commission free stock ETF|
|FTEC||-3.43%||Fidelity Info Tech||Fidelity commission free stock ETF|
|FHLC||-2.35%||Fidelity MSCI Healthcare||Fidelity commission free stock ETF|
|FMAT||-3.78%||Fidelity Materials||Fidelity commission free stock ETF|
|FIDU||-2.16%||Fidelity Industrials||Fidelity commission free stock ETF|
|FBIOX||-3.56%||Fidelity Biotech||stock mutual fund|
|FSMEX||0.37%||Fidelity Medical Equipment||stock mutual fund|
|FCNTX||-3.52%||Fidelity Contra Fund||stock mutual fund|
|FBGRX||-2.92%||Fidelity Blue Chip Growth||stock mutual fund|
|CFRAX||0.40%||Catalyst floating rate||bond mutual fund|
|FFRAX||0.23%||Fidelity floating rate||bond mutual fund|
|EIFAX||0.40%||Eaton Vance floating rate||bond mutual fund|
|RNDLX||0.69%||RiverNorth Strategic||bond mutual fund|
|FNMIX||0.19%||Fidelity New Market||bond mutual fund|
|FAGIX||-1.02%||Fidelity Capital & Income||bond mutual fund|
|LENDX||0.47%||Stone Ridge Alternative||peer to peer fixed return mutual fund|
|Prime Meridian Small Bus LP||0.52%||1 month lag||private peer to peer fixed return|
|Prime Meridian Real Estate LP||0.64%||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.