“I enjoy the hunt much more than the ‘good life’ after the victory.”
- Carl Ichan

Happy Thursday,

Overall, the S&P, Dow, and Nasdaq were all up in March following a solid February. The S&P went up 4.3%, the Dow increased 6.6% and the Nasdaq accelerated 0.4%.

In our view, the markets continue to be driven mainly by the Covid-19 recovery timetable, Covid recovery government support and the unyielding support of the Federal Reserve. There continues to be a generally optimistic feeling regarding the vaccine rollout, but the uncertainty of timing and a possibility that variant strains of the virus will push our recovery backward is producing a lumpy performance. It would not surprise us if the market remained a bit uncertain, with small pull-backs becoming a regular event.

That said, Q1 ’21 was a great quarter with our public equities portfolio up 10.6% on an annualized basis. The trend that emerged is the resurgence of the Dow leading the market up, but with the S&P and Nasdaq not very far behind. Growth is no longer the “name of the game”, but selected value stocks will lead the market up higher.

The S&P went up 4.3% to 3,973 in March, as the markets focused both on value investments and the hope for fast rollout of the Covid-19 vaccines to address the pandemic.
The Dow accelerated a whopping 6.6% to 32,981 in March, as the markets continued the rotation into lower PE, value investments, especially industrial and consumer staples.
Nasdaq increased 0.4% to 13,247 in March, as Tech stocks pulled back from recent highs and value stocks continued their slow rotation back into the limelight.

In March, Covid-19 infections, hospitalizations, and deaths in the U.S. all trended dramatically lower as vaccinations have ramped up quickly. Investors have also been encouraged by the passing of the $1.9T Recovery Plan and also the introduction of a $3.0T Infrastructure Plan by the Biden Administration.

Additionally, M&A transaction volume continued strongly, and the Fed continued its unprecedented support of the economy. The Housing sector also continued to be a bright spot with strong consumer demand thanks to low-interest rates.

In April, we believe the public markets will continue the rotation to lower PE, value, and industrial stocks and that overall returns will be positive, but mixed. We adjusted the cash portion of our public equities portfolio to 10% in April and believe that specific value stocks represent a buying opportunity during the rest of Q2 ‘21.

We especially like the Industrial sector where PE ratios are very reasonable, and growth in this sector should increase as the country opens back up for business. Morgan Stanley, Cat, Honeywell, Verizon, T-Mobile, Apple, Microsoft, Amazon, Alphabet, Home Depot, United Health Care, and Visa all continue to be top selections as we view them as stronger and more nimble competitors in their respective sectors. Visit our website for our latest TOP 10 investments.

Thanks again for your consideration & for sharing your thoughts and ideas with us.

Have a wonderful April and 2021 ahead!

Best Regards,
Marlene

Marlene Oddo
Partner
PointFour Capital, LLC