Shareholder Letter: Winter 2015

U.S. large-cap stocks continued to lead last year, but not all areas of the market saw gains.  Small-caps were only slightly positive and foreign stocks lost ground. 
This was not what pundits expected.  Many experts forecast that small-caps would continue the lead they had the previous year, but instead they lagged.  Others predicted that emerging markets and Europe would come back, but they didn’t. 

Market predictions feed into our hope that surely someone out there must know what’s going to happen in the market.  It’s simply unnerving to think that no one really knows what’s ahead for markets.  But what if there is no crystal ball, only great stories.  Then how do we invest?

Our solution is to use a logical process of aligning with what’s working in the current market. Our Upgrading strategy doesn’t require us to know the future,  yet it seeks to keep us invested in funds with strong recent performance. 

Last year was not an easy one to be a mutual fund investor.  Very few equity funds actually outperformed the S&P 500 in 2014. And as fund investors, this meant we had fewer winning options to choose from.  But by following our Upgrading approach, we invested our portfolios in large-cap U.S. stock funds last year and we avoided the losses from internationals.  No crystal ball required!

We use this same approach to manage our bond portfolios.  Last year the bond market also defied predictions. Most professionals anticipated that interest rates would rise, and bond prices would fall.  But rates stayed low, and bonds did well.

There will always be market predictions. And the forecasts I’ve seen for 2015 are all over the map.  I’ve read good reasons why stocks could continue to rise this year and also plausible explanations why they need a break.  I’ve heard that internationals are poised to come back, or that tech stocks could be the best performers and also that they’ve have had their run. There are good explanations why interest rates could rise as well as logical explanations of why they’ll remain low.

So, take predictions with a grain of salt. The fact is, no one really knows today what will happen for the rest of 2015. And, fortunately we don’t need to know the future to invest your portfolio wisely today.   We simply follow our time-tested discipline of aligning with what’s working.

As always, we are happy to hear from you if you’d like help or have questions. Many thanks for your continued support.

Janet Brown

President and Portfolio Manager
FundX Investment Group


The S&P 500 Index is a broad based unmanaged index of 500 stocks, which is widely recognized as representative of the equity market in general. You cannot invest directly in an index.

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