Dear Fellow Shareholders,
During periods of heightened market volatility there is a tendency to take money out of the market to safeguard it. However, history shows that staying invested during volatile times can be beneficial in the long run.
Since the S&P 500® record high in September, the equity markets have entered a correction period coupled with excessive market volatility. The market’s movement is primarily due to trade concerns, the possibility of higher interest rates, and fears of an upcoming economic slowdown. We believe the recent market action is driven more by changing headlines rather than fundamentals—and therefore we believe the bull market that started in 2009 remains intact.
In our years of experience we have seen excessive volatility happen time and time again. This type of volatility could lead to investor panic, taking the best companies down with the worst. Generally we find these periods to be attractive buying opportunities to purchase quality growth stocks/funds at a discount. Think of it this way. If you are shopping at your favorite retail store and everything suddenly becomes 20% to 30% cheaper would you panic by running out of the store? Of course not!…you would probably take advantage of the sale and buy more merchandise. We believe the same logic applies during market corrections. To us, buying high-quality investments “on sale” during significant downturns can lead to higher long-term gains as these growth companies are usually the first to snap back as the broad market recovers.
While no one can know what will happen in the coming months, it is important to realize that over decades the stock market has generated annualized returns of 8% on average per year. This includes significant market declines experienced on Black Monday in 1987, the dot-com bust in 2000 and the financial crisis in 2008. Over the long-term, the market has had an upward bias with significant market corrections proven to be exceptional buying opportunities.
We realize it’s easy to say volatility and market dips will work themselves out over time but it still can be incredibly difficult to watch a portfolio’s value decline. However, past performance (no guarantee of future results) reflects that investors who stayed invested during these correction periods have enhanced their long-term portfolio return.
We encourage investors to be patient, avoid market timing and take advantage of market opportunities as they present themselves.
Thank you for the opportunity to manage your assets.
Robert S. Bacarella
Robert S. Bacarella, Founder and President
Monetta Financial Services, Inc.
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The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating™ for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating™ metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. The Monetta Core Growth Fund received 3 stars among 1,256 for the three-year, 3 stars among 1,114 for the five-year, and 5 stars among 805 Large Growth funds for the ten-year period ending 3/31/19.