Question to Warren Buffet: Your investment thesis is so simple, why doesn’t everyone just copy you? Buffet answer: “Because nobody wants to get rich slow” – anecdotal…
Where are we, at the end of February 2019?
As of the end of February the stock market is within about 5% of its high in September. Think about that: falls out of bed around 20% and then within about 2 months is about ¾ of the way back. Of course, we don’t know for sure how it will play out the rest of the year, but the internal supply/demand statistics suggest that this recovery is one of the very, very strongest by historical standards – even compared to fresh bull markets. We seem finally (early March) to be witnessing a breather in the run back up (which is very normal) but history suggests to me the strong likelihood of new market highs by year end. I hope I’m right but then, we use fixed funds to offset risk.
Different pundits have been shouting out warnings of the coming of the bear market. It sounds like Paul Revere’s ride. Those who jumped out of the market in fear are now looking for a place to buy back in. This is difficult stuff!!! I’m sorry I couldn’t help my clients to avoid Q4 (I am working on some ideas) but with the help of Lowry’s Institutional Market Analysis, I never thought to sell out at the bottom, either.
The World of Fixed Income in February
Of course, I was unhappy that our fixed funds didn’t do much in Q4, maybe even lost a bit. And the year 2018 was not too impressive for them either. HOWEVER, YTD they are making up for it. This is not what I want (I want “steady”, especially when the stock market dives) but they are bouncing for sure. Example: the very large, very well-established Eaton Vance floating rate fund, which I use in your accounts, is up 4.69% YTD through March 6. That’s just plain crazy.
How Did the Markets and our Funds Do in February 2019?
We actually had a REALLY good month. Many of your accounts outperformed the stock market averages despite having money in fixed funds.
All index and fund returns are courtesy Morningstar.com. Here are the index returns and our fund returns, for Feb 2019:
| Feb 19 | |||
| S&P 500 | 2.97% | ||
| Nasdaq (technology) | 3.44% | ||
| Dow | 3.67% | ||
| NYSE Composite | 2.81% | ||
| Russell 2000 (small co) | 5.08% | ||
| US Aggregate Bond Index | -0.06% | ||
| ONEQ | 3.47% | Fidelity Nasdaq | Fidelity commission free ETF |
| IJR | 4.34% | iShares Small-Cap | Fidelity commission free ETF |
| FENY | 2.12% | Fidelity Energy | Fidelity commission free ETF |
| FTEC | 7.28% | Fidelity Info Tech | Fidelity commission free ETF |
| FDIS | 1.47% | Fidelity Discretionary | Fidelity commission free ETF |
| FHLC | 1.67% | Fidelity MSCI Healthcare | Fidelity commission free ETF |
| FBIOX | 5.59% | Fidelity Biotech | stock mutual fund |
| FSMEX | 3.02% | Fidelity Medical Equip | stock mutual fund |
| FCNTX | 2.39% | Fidelity Contra Fund | stock mutual fund |
| FBGRX | 3.43% | Fidelity Blue Chip Growth | stock mutual fund |
| PSGAX | 11.13% | Virtus KAR Small-Cap Gr | stock mutual fund |
| FKDNX | 6.03% | Franklin Dynatech | stock mutual fund |
| CFRAX | 1.77% | Catalyst floating rate | fixed income mutual fund |
| EIFAX | 1.65% | Eaton Vance floating rate | fixed income mutual fund |
| FFRAX | 1.53% | Fidelity floating rate | fixed income mutual fund |
| GIREX | 0.44% | Griffin real estate int rate | fixed income mutual fund |
| RNDLX | 0.89% | RiverNorth Strategic | fixed income mutual fund |
| FAGIX | 2.30% | Fidelity Capital & Income | fixed income mutual fund |
| LENDX | 0.49% | Stone Ridge Alternative | peer to peer fixed return m.f. |
| Prime Meridian Small Bus LP | 0.35% | 1 month lag | private peer to peer fixed return |
| Prime Meridian Real Estate LP | 0.68% | 1 month lag | private peer to peer fixed return |
| KIP, Kay Income Partners LP | 0.56% | private mortgage fund |
Your investment return(s) for February 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.
Best,