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July 2023

Market Update

(all values as of 06.28.2024)

Stock Indices:

Dow Jones	39,118
S&P 500	5,460
Nasdaq	17,732

Bond Sector Yields:

2 Yr Treasury	4.71%
10 Yr Treasury	4.36%
10 Yr Municipal	2.86%
High Yield	7.58%

YTD Market Returns:

Dow Jones	3.79%
S&P 500	14.48%
Nasdaq	18.13%
MSCI-EAFE	3.51%
MSCI-Europe	3.72%
MSCI-Pacific	3.05%
MSCI-Emg Mkt	6.11%

US Agg Bond	-0.71%
US Corp Bond	-0.49%
US Gov’t Bond	-0.68%

Commodity Prices:

Gold	2,336
Silver	29.43
Oil (WTI)	81.46

Currencies:

Dollar / Euro	1.06
Dollar / Pound	1.26
Yen / Dollar	160.56
Canadian /Dollar	0.73

Portfolio Overview

Ocean Park Investors Fund rose 3.08%* in July, while the S&P 500 rose 3.11% and the NASDAQ Composite rose 4.05%. Once again the fund’s technology holdings led the way, and once again our substantial position in Nvidia posted a double-digit gain. Nvidia has gained more than 200% this year through July, as its chips have fueled the explosion in AI development.

During July, we increased positions in the technology sector and reduced positions in the consumer discretionary and service sector. Notable changes included: initiating positions in Sherwin Williams and ON Semiconductors; selling Ford and Netflix after their earnings reports indicated potential long-term issues; and trimming positions in Advanced Micro Devices, Salesforce and Trade Desk. We finished the month at about 97% net long, unchanged from 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

As in June, all eleven sectors in the S&P 500 rose in July. Energy gained the most and health care the least. Also as in June, gains were distributed almost evenly across growth and value stocks. Volatility was remarkably low, as the S&P 500 did not move more than 1% on any of the 20 trading days.

Second quarter earnings reported in July were solid. With 51% of S&P 500 companies reporting, 80% beat consensus earnings expectations which was better than the five-year average. However, only 64% beat consensus revenue expectations, which was below the five-year average. That may explain, at least in part, why the stocks of companies that beat earnings estimates, on average, sustained small price losses after their reports. Another reason may be that, notwithstanding the beats to earnings expectations, the year-over year decline in blended earnings was -7.3%, the largest drop since the Covid-impacted second quarter of 2020.

The forward 12-month price/earnings ratio at month’s end was 19.4, above the 5-year average of 18.6 and the 10-year average of 17.4.

Macro Overview

Macro Overview

Economic headlines in July were mixed. Unemployment dropped to 3.6% but job growth was less than expected. Retail sales were higher but housing was weak. Factory orders were higher but manufacturing was lower. Consumer sentiment was better than expected, rising to its highest level in almost two years.

As anticipated, the Fed raised rates by 0.25% and perhaps more importantly left open the prospect of further increases. Chairman Powell said “…it’s certainly possible that we will raise [rates] again at the September meeting if the data warranted.”

Analysts remain divided on the prospects for recession. On one hand, the yield curve has been inverted for the past year (short-term rates on government bonds higher than long-term rates). This has been a generally reliable indicator of a coming recession for the last five decades. On the other hand, government statistics on the economy continue to suggest a soft landing. Inflation as measured by the Consumer Price Index declined to 3.0% year-over-year. Wage growth declined from 1.2% in the first quarter to 1.0% in the second quarter. And the Commerce Department initial estimate of second quarter GDP growth was 2.4%, better than expected and better than the 2.0% growth in the first quarter. So, the jury is still out.

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.