April has not been a “supercalifragilisticexpialidocious” type of month for equity markets. Major indexes are “stepping in time” thus far, falling from 1.4% to 3.2%, and my bellwether, Apple tumbled over 5.3% last week. (Yes, I have finally begun to take some profits in Apple). If Apple earnings fall short of expectations, don’t expect a “spoonful of sugar to help the medicine go down in a most delightful way.”
This week is loaded with market movers, including around 175 S&P companies reporting earnings including Apple, ConocoPhilips, Netflix, AT&T, Boeing, Caterpillar, ExxonMobil, and Bristol Myers, as well as the Case-Shiller Home price Index, consumer confidence numbers, the FOMC meeting, Eurozone issues, and of course, jobs. News this week may likely determine if we have seen an end to the current pullback, or whether markets may drop an additional 5% to 10% over the next several weeks. If the big guns beat expectations, the remainder of April and May will most likely be viewed a “Jolly Holiday” by the investment community. Note that many analysts who follow Apple expect the tech giant to meet expectations.
Our conservative portfolios have performed quite well in April, with Portfolio #1 down only 0.22% and Portfolio #2 slipping 0.62%. Unfortunately, Marea’s more aggressive growth portfolio posted a 1.52% loss.
I was recently asked when to begin the process of buying back equities. Since no one knows when (or if) equities will begin to move towards new 2012 highs, I suggested to slowly and cautiously increase exposure to dividend-paying equities on down market days; however, don’t forget our fixed income picks. On a month-to-date basis, the Vanguard Short term Bond (BSV) is up 0.34%, the iShares Barclays Aggregate Bond Fund (AGG) generated a 0.89% return, and the iShares Barclays Intermediate Credit (CIU) posted a gain of 0.58%.
Let’s hope that investors have the luck of a sweep this week since “a sweep is as lucky as lucky can be.” (I was inclined to include a Mary Poppins theme in this week’s update because I just enjoyed watching this old favorite with my daughter, Taylor.)