Around and around we go. The FactSet U.S. broad market index dropped by 4% from April 1st to April 29th. The path was very bumpy, with a peak-to-bottom decline of up to 13% during the month. Markets reacted strongly to policy changes and new tariffs, making stocks, bonds, commodities, and currencies swing widely.
In January, we talked about how much risk investors were willing to take. We pointed out that conditions were improving, but high stock prices (valuations) in the U.S. made it important to spread out investments into other areas.
In February, we highlighted the strength of the U.S. job market. With unemployment near 4%, close to historic lows, this strength provided comfort even if markets became shaky. In simple terms, the strong job market gave investors some safety.
In March, we discussed rising inflation fears and lower consumer confidence. People around the world were beginning to feel the effects of the anticipated tariffs and potentially higher costs. Even though confidence was falling, we felt it was a good time to think differently from the crowd—taking a contrarian view.
In April, market ups and downs created buying opportunities for us. We invested cash on hand within the Matco Global Equity Fund and moved some money from safer investments to those with better growth potential.
Here are two examples:
First, Fortinet, a cybersecurity company with strong market position and good long-term growth opportunities, dropped to its lowest price since November 2024. We took this chance to buy more shares at a good price.
Second, Netflix. This streaming company is currently making more money by managing costs carefully and growing its revenue through various methods. When market sentiment turned negative in April, we saw it as a chance to invest more.
Right now, we're in the middle of earnings season for the first quarter 2025. Companies are careful with their future outlooks because of tariff uncertainties. We’ll provide a detailed update next month once more companies have shared their results.
On the economic side, the biggest news was the negative U.S. GDP number for the first quarter. The main reason was that imports increased much faster than exports, as companies bought extra inventory before tariffs took effect. We expect other economic indicators may weaken through the summer. Our attention will mainly be on the job market in the coming months. Short-term, we expect things to slow down a bit, but our real focus is on the longer-term outlook over the next 18 to 24 months.
As of April 29th, the Matco Global Equity Fund, Series O, was down by 2.9% for the month and 3.81% year-to-date. We are ahead of the overall world and U.S. indexes. By staying diversified and actively managing our investments, we aim to make the most of the opportunities this volatile market offers.