Ocean Park Capital Management

2503 Main Street

Santa Monica, CA 90405

Main: 310.392.7300

Daily Performance Line:  310.281.8577

November 2017
Market Update
(all values as of 07.31.2020)

Stock Indices:

Dow Jones 26,428
S&P 500 3,271
Nasdaq 10,745

Bond Sector Yields:

2 Yr Treasury 0.11%
10 Yr Treasury 0.55%
10 Yr Municipal 0.64%
High Yield 5.44%

YTD Market Returns:

Dow Jones -7.39%
S&P 500 1.25%
Nasdaq 19.76%
MSCI-EAFE -10.64%
MSCI-Europe -10.86%
MSCI-Pacific -10.53%
MSCI-Emg Mkt -3.21%
 
US Agg Bond 7.72%
US Corp Bond 8.44%
US Gov’t Bond 9.35%

Commodity Prices:

Gold 1,992
Silver 24.54
Oil (WTI) 40.43

Currencies:

Dollar / Euro 1.17
Dollar / Pound 1.30
Yen / Dollar 105.01
Dollar / Canadian 0.74

Fund Overview

The major indices gained ground in November, while the Ocean Park funds sustained fractional losses.  The funds outperformed until the final two trading days of the month, when significant profit-taking hit the technology sector and particularly the semiconductor stocks which had driven our results for much of 2017.  Notwithstanding the November results, the funds continue to outperform most of the major indices for the year to date.

During November, we added to positions in the consumer discretionary and service and technology sectors. We also partially hedged our long positions in the technology sector by initiating a position in SOXS, which is an ETF with a leveraged short exposure to the PHLX semiconductor sector index.  We finished the month at about 90% net long, up from about 85% at the end of October.

A schedule showing the performance of the Investors Fund is included below, along with our Asset Allocation Chart. 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.

Please note that our annual privacy notice is included on page four of this newsletter.

 

*These results are pro forma.  Actual results for most investors will vary.
See additional disclosures on page four.

Past performance does not guarantee future results.

 

 
Equity Overview - November 2017

Equity Overview

As the third quarter earnings season concluded, corporate results continued to impress.  With 95% of S&P 500 companies reporting, the blended growth rate for third quarter earnings rose to 6.2%, which was even higher than the 4.7% rate at the end of October.  Upside earnings surprises at a 74% pace and upside revenue surprises at 66% were both above their one-year and five-year averages.  And future earnings guidance was generally positive.

Reversing the trend for most of 2017, value stocks outperformed growth stocks during the month.  Uncharacteristically, earnings surprises did not correlate strongly with stock performance, generating gains which were less than five-year averages.  And earnings disappointments generated losses which were worse than five-year averages.

 

 

 

 
Macro Overview - November 2017

Macro Overview

Economic statistics reported in November were generally positive.  Manufacturing and services indicators both showed growth.  Housing was strong.  Consumer confidence rose again.  The Commerce Department revised its third quarter growth estimate upwards, to 3.3% from its previous 3.0%.  The estimate is now higher than second quarter growth of 3.1%, and if sustained would represent the fastest pace of GDP growth in three years.

Tax reform passed both houses of Congress and will dramatically reduce the corporate tax rate from 35% to 21%.  Individual rates will also drop, particularly for the top 1% of taxpayers.  However, because certain tax deductions for individuals – such as the deduction for state and local income and property taxes – will be significantly limited or eliminated, some taxpayers will see their actual federal tax payments increase.  The legislation is projected to reduce total federal tax revenue by $1,400,000,000,000 ($1.4-trillion) over the next ten years.  Its adherents argue that dramatic economic growth or federal budget cuts will offset any resulting increase in the national debt.

Hurricane season officially ended on November 30.  For the first time in recorded history, three Category 4 storms hit the U.S., resulting in catastrophes in Texas, Florida, Puerto Rico, and the Virgin Islands.  Overall, 2017 hurricane damages are projected at a record-setting $200-billion.

 

 

 

 

 
Additional Disclosures and Privacy Notice

 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.

 

Privacy Notice

Federal privacy laws require that we explain to you how we handle “nonpublic personal information.”  This is information we receive or develop about you in the course of our relationship with you.  It includes information you provide to us orally or in the Confidential Investor Questionnaire or other forms, and information we learn about you in the course of providing services to you.

We do not disclose nonpublic personal information about you to third parties, except in certain limited circumstances.  These circumstances include (a) disclosure to our attorneys, auditors, prime brokers, or custodians in the course of providing services to you, (b) disclosure with your consent, or (c) disclosure where required by law or judicial process, such as a court order.

We also restrict your nonpublic personal information to those employees who need to know such information in order to provide services to you.  And we maintain physical, electronic, and procedural safeguards to protect your nonpublic personal information.