July has been a pretty poor month for a bullish only fund. We could have course moved completely to cash with the market moving down as it was, but you never know when it is going to turn, plus we had some stocks that may have seen gains if it did fall.
There must have been a sigh of relief a few minutes ago when the UK Producer Price Index was released. This shows us inflation at the factory gate, both input (cost of raw materials) and output (increase in prices passed on by factories), came in lower than expected.
If it was not already clear, the slowdown in the UK housing market and associated industries was highlighted by the poor figures during last week. What was also shown was that individual borrowing has taken a dive, not good for the retail sector, or banks.
I thought I better just update the virtual fund, to adjust a couple of stops and bring it into line for the end of the month. At the close of June we ended 8% up as apposed to the S&P being down 8%.
In the UK we have already seen the GfK NOP Consumer Confidence figure released. This report was actually leaked 3 minutes early. Maybe they just wanted to get the bad news out as soon as they could, as the report revealed the lowest level of confidence in June since records began. It has only been worse than this on one other occasion, that was in March 1990 when we were in a full blown recession. It may appear even worse for the prospects as those that were surveyed do not see things getting better in the next 12 months.
Wow, we have seen the bears take the upper hand and the markets fall like a stone over the past month. The S&P is currently down by 8.37% for the month or 117 points. Meanwhile the Dow is down by 9.38% or 1185 points.
The long term stocks have continued to run well even though the market has been in a dive. At the close of 18th June we are up in the month by 12.55% (unrealised) as against a 4.47% loss in the S&P.
The well weighted balance of stocks/sectors in the virtual fund has ensured that whilst the S&P is down by nearly 3% in the month, the stocks are still up 7.1%.
We take a look at inflation once again this week, watch out for possible fireworks! Early indicators may suggest we will see inflation rise higher than previously predicted. Inflation in the UK is now expected to reach 3.8% later in the year, double the level that the government has set.
The markets continued to see some large volatility. Fortunately whilst we have seen a small pullback in the unrealised profits so far this month, we are still positive (+6.23%) as apposed to the 4% loss in the S&P.
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