Ocean Park Capital Management

2503 Main Street

Santa Monica, CA 90405

Main: 310.392.7300

Daily Performance Line:  310.281.8577

October 2018
Market Update
(all values as of 02.29.2024)

Stock Indices:

Dow Jones 38,996
S&P 500 5,096
Nasdaq 16,091

Bond Sector Yields:

2 Yr Treasury 4.64%
10 Yr Treasury 4.25%
10 Yr Municipal 2.53%
High Yield 7.63%

YTD Market Returns:

Dow Jones 3.47%
S&P 500 6.84%
Nasdaq 7.20%
MSCI-Europe 1.23%
MSCI-Pacific 3.98%
MSCI-Emg Mkt -0.27%
US Agg Bond -1.68%
US Corp Bond -1.67%
US Gov’t Bond -1.59%

Commodity Prices:

Gold 2,051
Silver 22.87
Oil (WTI) 78.25


Dollar / Euro 1.08
Dollar / Pound 1.26
Yen / Dollar 150.63
Canadian /Dollar 0.73

Fund Overview

As economic growth showed signs of slowing, equities sustained major losses in October with the S&P 500 suffering its largest one-month decline in 10 years.  The Ocean Park funds remain up for the year but also experienced a significant monthly loss, as the technology and consumer discretionary sectors were among the hardest hit.  For the year to date we are ahead of most of the major indices, as well as the HFRI Equity Hedge Index which is down 2.75%.

During the month, we added to positions in the consumer staples and technology sectors, and reduced positions in the autos and transportation, consumer discretionary and service, and producer durables sectors.  We ended the month at about 88% net long, down from about 91% in September.

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.



*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 - October 2018

Equity Overview

Volatility returned with a vengeance in October, as 10 of 23 trading days saw gains or losses in the S&P 500 of at least 1%.  Value stocks outperformed growth stocks, and large cap stocks outperformed mid-cap and small cap stocks.  But almost all sectors of the market declined for the month.  The damage was particularly severe in the consumer discretionary sector which registered double-digit losses.  Within the technology sector, semiconductor stocks also sustained double-digit losses.

Third-quarter earnings reported in October were generally strong.  With 74% of S&P 500 companies reporting, 78% have exceeded consensus earnings estimates and 61% have exceeded consensus revenue estimates, in both cases better than their five-year averages. But investors failed to reward good earnings, and punished severely those companies that failed to beat expectations—especially companies that gave neutral or weak forward guidance.



Macro Overview - October 2018

Macro Overview

Economic data reported in October generally showed growth in the economy, but at or slightly below expectations, including retail sales and consumer sentiment.  Housing continued weak.  The minutes of the Fed’s September meeting, released in October, indicate that the Fed will stick to its policy of further interest rate increases, with the next bump likely to occur at the December meeting.

Meanwhile, a variety of factors—all leading to fears of a slowdown in U.S. growth—contributed to the markets’ October decline.  Uncertainty over the outcome of the midterm elections was one.  The ongoing trade war was another: a recent survey indicated that 35% of corporate CFO’s said it was their top concern.  And the tax cut, which helped propel the economy earlier this year, is expected to have diminishing impact in coming years.  Additionally, recent international data suggests slowing growth in Europe, China, and Japan.  Thus the current consensus among economists projects that GDP growth, which is around 3% this year, will decline to about 2% by 2020.



Additional Disclosures - October 2018

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.