“[Our] Senior Analyst […] looked at pullbacks of 10% or more dating back to 1940…[and could find no instances] of pullbacks of over 10% occurring within 9 months of each other……” – Lowry’s Institutional Market Trend Analysis, May 31, 2019
Where are we, at the end of May 2019?
Aside from the above quote (predicting – which is no guarantee – that the pullback will not go much further), there is other analysis that points to May’s decline being a normal pullback in the ongoing bull market.
In May, the averages lost over 6% as you will see below. Most moderate client portfolios dropped 4 – 5% HOWEVER, this follows market gains of over 5% in April. Further, as of today, the averages have already risen over 2.5% in June.
Of course, a bull market climbs a wall of worry and so the doomsday crowd has been out singing a chorus of scary warnings. Instead, my focus has been on finding opportunities. The most exciting part of that focus has been fixed return funds.
On the fixed returns side, I have been moving certain client funds into 2 new REITS, the Blackstone and Starwood and they have been performing even better than expected. See below. I have mentioned them in past newsletters. They pay regular cash dividends (which may be reinvested) and have histories (which we can discuss) of appreciating unit prices. Liquidity is an issue so you would want to buy with the clear intention of holding for a while.
Unfortunately, the floating return funds (Catalyst and Eaton Vance) have shown again that they are liable to lose a little when the stock market falls. That’s not good and I will be discussing moving some of that money to the REITs.
Finally, I’m studying a fund that Fidelity has offered for four years on its alternative investments platform: it has been yielding a very steady approximately 11% interest. The fund creates “hard money” short term loans, mainly to real estate developers. Unfortunately, it is only open to clients with a 7 figure net worth.
How Did the Markets and our Funds Do in May 2019?
All index and fund returns are courtesy Morningstar.com. Here are the index returns and our fund returns:
|Russell 2000 (small co)||-7.90%|
|US Aggregate Bond Index||1.78%|
|ONEQ||-7.94%||Fidelity Nasdaq||Fidelity commission free ETF|
|IJR||-8.69%||iShares Small-Cap||Fidelity commission free ETF|
|FTEC||-8.86%||Fidelity Info Tech||Fidelity commission free ETF|
|FDIS||-7.79%||Fidelity Discretionary||Fidelity commission free ETF|
|FBIOX||-5.24%||Fidelity Biotech||stock mutual fund|
|FCYIX||-6.16%||Fidelity Select Industrials|
|FCNTX||-5.72%||Fidelity Contra Fund||stock mutual fund|
|FBGRX||-8.15%||Fidelity Blue Chip Growth||stock mutual fund|
|PSGAX||-3.57%||Virtus KAR Small-Cap Gr||stock mutual fund|
|FKDNX||-3.97%||Franklin Dynatech||stock mutual fund|
|CFRAX||-0.42%||Catalyst floating rate||fixed income mutual fund|
|EIFAX||-0.43%||Eaton Vance floating rate||fixed income mutual fund|
|FFRAX||-0.53%||Fidelity floating rate||fixed income mutual fund|
|GIREX||0.37%||Griffin real estate int rate||fixed income mutual fund|
|RNDLX||0.39%||RiverNorth Strategic||fixed income mutual fund|
|FAGIX||-2.54%||Fidelity Capital & Income||fixed income mutual fund|
|LENDX||0.29%||Stone Ridge Alternative||peer to peer fixed return m.f.|
|Starwood REIT||0.98%||1 month lag||real estate investment trust|
|Blackstone REIT||0.73%||1 month lag||real estate investment trust|
|Prime Meridian Small Bus LP||0.25%||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 May 2019 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.