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February 2020

Market Update

(all values as of 09.30.2024)

Stock Indices:

Dow Jones	42,330
S&P 500	5,762
Nasdaq	18,189

Bond Sector Yields:

2 Yr Treasury	3.66%
10 Yr Treasury	3.81%
10 Yr Municipal	2.63%
High Yield	6.66%

YTD Market Returns:

Dow Jones	12.31%
S&P 500	20.81%
Nasdaq	21.17%
MSCI-EAFE	12.90%
MSCI-Europe	12.10%
MSCI-Pacific	13.80%
MSCI-Emg Mkt	16.80%

US Agg Bond	4.44%
US Corp Bond	5.32%
US Gov’t Bond	4.39%

Commodity Prices:

Gold	2,657
Silver	31.48
Oil (WTI)	68.27

Currencies:

Dollar / Euro	1.11
Dollar / Pound	1.33
Yen / Dollar	142.21
Canadian /Dollar	0.73

Fund Overview

Equities declined significantly in February as the market began to absorb the worldwide impact of the coronavirus. The Ocean Park funds also lost ground, but outperformed the major indices and remained well ahead of them for the year to date.

Over the life span of the Ocean Park funds—almost 22 years—there have been several periods when stocks incurred dramatic losses: the Long Term Capital Management crisis in 1998, the dot-com bubble in 2000-2001, and the financial crisis of 2008, to name a few. At such times there is often a powerful impulse to flee. But as the late Jack Bogle, founder of Vanguard Investments put it: “If someone tells you to get out of the market, before you do, remind them to tell you when to get back in.” Put another way, timing the market has proved impossible in the long run. Thus, we have always resisted the temptation to time the market, relying instead on the view that, over time, stocks have an upward bias. We believe that our results since inception validate that approach.

During February, we added to positions in the technology sector, and reduced positions in the consumer discretionary and service and health care sectors. We ended the month at about 96% net long, down from about 98% net long in January.

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 - February 2020

Equity Overview

Although all sectors lost ground in February, growth stocks outperformed value stocks. As in January, technology was among the better sectors and energy was the weakest. At mid-month the S&P 500 reached an all-time high. But in the last week it lost 11.5%, its worst week since 2008.

4^th quarter corporate earnings reported in February continued the middling trend of January. With 87% of S&P 500 companies reporting, the blended growth rate rose to a modest 0.9%, better than the -0.3% in January (and better than the consensus expectation of -1.6% at the end of the quarter). In addition, 70% of companies beat consensus earnings estimates (below the one-year and five-year averages) while 66% beat consensus revenue estimates (better than the one-year and five-year averages).

Macro Overview - February 2020

Macro Overview

Economic data reported in February were generally positive. Employment was strong and manufacturing grew for the first time since July 2019.

But any optimism from those statistics evaporated in the last week of the month, as fear grew that the coronavirus could wreak widespread damage. The losses on Wall Street that week were mirrored in the international markets, as the Nikkei 225 in Japan lost 10%, the British FTSE 100 lost 11%, and the German DAX lost 12%. The fear extended beyond the stock market to the bond market, where the yield on the benchmark U.S. Treasury 10-year bond fell to an all-time low of 1.15%.

The Fed took notice. Chairman Powell noted that “the coronavirus poses evolving risks to economic activity,” but promised that the Fed would “act as appropriate to support the economy,” implying that interest rate cuts were in the offing.

The administration expressed its view at month’s end through Larry Kudlow, the director of the White House’s National Economic Council. He said that the economy was fundamentally strong and the risk of something “very bad” happening in the U.S was low.

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.