“Until [and assuming] the evidence changes, diversified investors should not fall for the siren song of the indexes that are rising on the backs of just a few [companies].” – Lowry’s Institutional Market Analysis
“Everything should be made as simple as possible, but not simpler” – Albert Einstein
How Did the Markets and Our Funds Do in May 2023?
The stock market showed an incredible level of divergence in May, where the overall market was down, while certain mega-cap companies were very strong. It’s difficult to believe and understand that the average stock was down 4% in May (NYSE Composite), yet the technology index (Nasdaq) was up nearly 6%. Our consumer staples fund, consisting of “Steady Eddie” companies like Walmart, Procter & Gamble and Coca Cola (considered a good sector when a recession may be looming), lost 4.8%. Utilities fared similarly. The “dividend aristocrats” (solid companies with a history of rising dividends and earnings) were down 5.9%!
It’s tempting to declare that risks are gone and simply take on an all-clear attitude. It’s also tempting to load up a portfolio on a fund that focuses on mega-tech companies, but the fact is, eventually all segments will rise or fall together. My simple analysis is that a very small percent of the market can’t be the engine that pulls the whole train.
Treasuries maturing in 6 months are now yielding over 5%. Money markets are yielding over 4%. We’re making use of both. We are now using 2 credit funds – Blackstone and Fidelity. They are both paying approximately 9-10% dividends and the share prices have been stable. The Fidelity fund is new. The environment for credit funds in general seems favorable right now.
Following is our fund performance in May:
| May-23 | |||
| S&P 500 | 0.43% | ||
| Nasdaq (technology) | 5.93% | ||
| Dow 30 | -3.17% | ||
| NYSE Composite | -4.00% | ||
| Russell 2000 (small co) | -0.92% | ||
| US Aggregate Bond | -1.16% | ||
| ONEY | -0.23% | SPDR Russell Yield | ETF |
| NOBL | -5.90% | Dividend Aristocrats | ETF |
| RSP | -3.81% | Invesco S&P Equal Wt | ETF |
| VBR | -3.42% | Vanguard Small Cap | ETF |
| FDFAX | -4.82% | Fidelity Consumer Staples | stock mutual fund |
| FSLVX | -3.77% | Fidelity Large Cap Value | stock mutual fund |
| FSMVX | -3.54% | Fidelity Mid Cap Value | stock mutual fund |
| FCPVX | -2.69% | Fidelity Small Cap Value | stock mutual fund |
| FBGRX | 7.94% | Fidelity Blue Chip Growth | stock mutual fund |
| IDIVX | -4.59% | Integrity Dividend Harvest | stock mutual fund |
| PRFDX | -5.18% | T Rowe Price Equity Income | stock mutual fund |
| FSUTX | -4.21% | Fidelity Select Utilities | stock mutual fund |
| FLPSX | -3.77% | Fidelity Low Priced Stock | stock mutual fund |
| CFRAX | -0.56% | Catalyst floating rate | income mutual fund |
| EIFAX | -0.37% | Eaton Vance floating rate | income mutual fund |
| FFRAX | -0.33% | Fidelity floating rate | income mutual fund |
| RNDLX | -0.69% | RiverNorth Strategic | income mutual fund |
| FAGIX | -0.87% | Fidelity Capital & Income | income mutual fund |
| Starwood REIT, class D | -0.46% | Apr* | real estate investment trust |
| Blackstone REIT, class D | 0.20% | Apr* | real estate investment trust |
| Blackstone Credit Fd, class I | 1.20% | Apr* | private lending trust |
| Fidelity Credit Fd, class I | 0.63% | Apr* | private lending trust |
| Prime Meridian Real Estate | 0.22% | Apr* | private fixed return |
| KIP, Kay Income Partners LP | 0.56% | May | private mortgage fund |
(Courtesy Morningstar Workstation)
* 1-month reporting lag
Your month of May investment returns:
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.
Best,