Ocean Park Capital Management

2503 Main Street

Santa Monica, CA 90405

Main: 310.392.7300

Daily Performance Line:  310.281.8577

October 2022
Market Update
(all values as of 12.30.2022)

Stock Indices:

Dow Jones 33,147
S&P 500 3,839
Nasdaq 10,466

Bond Sector Yields:

2 Yr Treasury 4.41%
10 Yr Treasury 3.88%
10 Yr Municipal 2.59%
High Yield 8.87%

YTD Market Returns:

Dow Jones -8.78%
S&P 500 -19.44%
Nasdaq -33.10%
MSCI-EAFE -16.79%
MSCI-Europe -17.28%
MSCI-Pacific -15.59%
MSCI-Emg Mkt -22.37%
 
US Agg Bond -13.01%
US Corp Bond -15.76%
US Gov’t Bond -13.58%

Commodity Prices:

Gold 1,830
Silver 24.18
Oil (WTI) 80.48

Currencies:

Dollar / Euro 1.06
Dollar / Pound 1.20
Yen / Dollar 133.43
Canadian /Dollar 0.73
 

Portfolio Overview

Ocean Park Investors Fund rose 5.98%* in October as stocks rebounded across the board.  The S&P 500 rose 7.99% and the NASDAQ Composite rose 3.90%.  Portfolio gains were strongest in the health care sector (led by Dexcom, up 50%) and the financial services sector (led by JP Morgan, up 20%).

During October, we reduced positions in the consumer discretionary and service sector and increased exposure to the technology sector.  We finished the month at about 90% net long, down from about 93% in June.

 

 

 

Daily updates on our activity are available on our Results Line, at 310-281-8577, and current information is also maintained on our website at www.oceanparkcapital.com. To gain access to the site enter password opcap.

*These results are pro forma. Actual results for most investors will vary. See additional disclosures on page 4. Past performance does not guarantee future results.

 
Equity Overview

Equity Overview

Every sector in the S&P 500 rose in October, with energy stocks in the lead and consumer stocks lagging.  Value stocks outperformed growth.  Volatility was extreme, as the S&P 500 moved more than 1% on 12 of 21 trading days—with 8 of those moves above 2%. The forward price/earnings ratio for the S&P 500 at month end was 16.3, well below the 5-year average of 18.5.

The tenor of third quarter earnings reported in October echoed the theme of second quarter results:  decent but unimpressive.  However, “decent” was enough to satisfy the markets, as fears of a steep earnings decline proved unjustified.  With 52% of S&P 500 companies reporting, 71% beat consensus earnings expectations and 68% beat consensus revenue expectations—in both cases, lower than the one-year average beat rate.  And once again the magnitude of earnings beats was modest, averaging 2.2% above consensus versus 3.1% in the second quarter and 6.5% for the previous year.

 

 

 
Macro Overview

Macro Overview

Economic headlines in October were again mixed.  Payroll numbers declined but were better than expected, and, and unemployment ticked down to 3.5%.  Retail sales were flat.  But housing continued weak as mortgage rates remained elevated.

Inflation dropped to 8.2% annualized (from 8.3% in September), which raised hope that the Fed might be able to moderate its interest rate increases later this year.

Notably, third quarter GDP rose 2.6%.  This suggests that the economy is not in a recession, notwithstanding that GDP declined in the two previous quarters.  However, projections for future growth are pessimistic.  The International Monetary Fund (IMF) expects US GDP to decline from 5.7% in 2021 to 1.6% in 2022, and 1.0% in 2023.

 

 

 
Additional Disclosures

Additional Disclosures

Performance data for OPI reflect the reinvestment of dividends and other earnings on the fund’s assets.  Performance data for the major indices reflect only changes in the value of those indices, and would be higher if dividends were included. However, the index data do not reflect fees that would be paid to index fund managers and transaction costs that would be incurred when their component stocks are bought or sold, while OPI’s data do reflect quarterly fees and expenses incurred by the fund.  The information provided is believed to be reliable, but its accuracy or completeness is not warranted. This material is not intended as an offer or solicitation for the purchase or sale of any stock, bond, mutual fund, or any other financial instrument. The views and strategies discussed herein may not be appropriate and/or suitable for all investors. This material is meant solely for informational purposes, and is not intended to suffice as any type of accounting, legal, tax, or estate planning advice. Any and all forecasts mentioned are for illustrative purposes only and should not be interpreted as investment recommendations.