To all my Partners,
By now all of you have received your individual monthly statements. If for any reason you have not, please contact me and will be glad to resend it to you.
As we turned the calendar to July 1st, half of 2024 is over and we now head into the 2nd half. Bena Capital had a great month increasing our portfolio of stocks by +9.85% for June
This makes our YTD performance of Bena Capital at +11.46% since the beginning of 2024. We had some stumbles coming out of the gate but hopefully, the 2nd half of this year we’ll have more up months than we’ll have down ones. For 2024, our ups & downs include
|
Bena Capital up months |
Bena Capital down months |
| February | January |
| March | April |
| May | |
| June |
Thank you, Nvidia!
We’ve owned Nvidia for a few years and now that the A.I. boom is being understood, we can enjoy our investments in that stock and waiting for the rest of Wall Street to come around. The enthusiasm for the chip maker Nvidia, whose products are seen as an essential component to powering A.I. technology kept building through the 2nd quarter of ’24. While much of the S&P 500 languished (the average stock was up only +4.1% for the last 3 months/2nd quarter), that was the largest ‘underperformance since at least 1990! Nvidia stock though rose +37% during that same 2nd quarter which brought us the largest gains for Bena Capital Fund
2nd Quarter of 2024
|
+13.24% |
S&P 500 companies with A.I. themes: +14.7% |
|
Bena Capital Fund |
S&P 500 companies without A.I. themes: -1.2% |
The Labor Report released last Friday (July 5th) shows further evidence that the economy is cooling and unemployment is starting to rise again. This is what the Federal Reserve is wanting to accomplish by keeping interest rates higher charging the larger banks 5.00 -5.25% interest rates.
The consensus is that the Federal Reserve may have an interest rate cut in September, just before the November elections! The mantra is that the Federal Reserve is non-political. I don’t believe it because Chairman Jay Powell, knows that if Trump wins the election, he (Powell) is probably toast!
The economy for June picked up 200K jobs for last month but the top 3 job sectors increased their categories that all receive money from the government.
Government: +80K jobs
Healthcare & Social Assistance: +82.4K
When the government keeps hiring just to prop up the monthly job figures, the economy is starting to slow! And another sign that the economy is starting to slow down, according to the NFIB (National Federation of Independent Businesses) this week corporate bankruptcies have increased:
U.S. Corporate Bankruptcies Rise in June
- 75 new corporate bankruptcy filings for June
- Highest number recorded in a single month since at least the start of 2020
- 346 total filings so far in 2024, the highest number of bankruptcies in 13 years
Normally, I wait until after June’s Consumer Price Index (CPI) is released before sending our Partner’s Letter to everyone. I’ll be out of town the next few days and won’t be back until next week so I wanted to get this out to everyone before leaving. Just to refresh about the inflation gauge of CPI, the month of May, we had an increase of prices +3.3%, year over year. Prices are still accelerating but not as much as it was just a few months ago.
Over the last 3 plus years from January 2021 to May 2024:
+19.3% +21.4% +21.2% +35.6%
Overall inflation All food groups All shelter costs All energy
Source: Bureau of Labor Statistics
With the sustained higher interest rates by the Federal Reserve, the hope is to slow down the economy but the main culprit is not a great economy but as economist Milton Friedman said was too much money added into the economy by the federal government!
CPI (Consumer Price Index) Inflation Guage Y/Y
+2.0% +3.7% +3.2% +3.1% +3.4% +3.1% +3.2% +3.5% +3.3%
Fed’s Target Sept. Oct. Nov Dec Jan Feb March April May
2023 2023 2023 2023 2024 2024 2024
Core CPI (excluding food & energy) Inflation Guage Y/Y
2.0% 4.1% 4.0% 4.0% 3.9% 3.9% 3.8% 3.8% 3.6% 3.4%
Fed’s Target Sept. Oct. Nov Dec Jan Feb March April May
2023 2023 2023 2023 2024 2024 2024
So what do we do?
History reminds us that it has typically been better to ‘buy’ than ‘bail’.
We at Bena Capital Fund are playing the long game! By that I mean in two to three years from now, we really won’t remember did the Federal Reserve cut 2 or 3 times back in 2024? If markets drop for a month, or more it may create a market correction which have occurred naturally throughout the years.
For all 24 corrections in the S&P 500 since W.W. II (1945), it took only 4 months to recover losses.
Never let your emotions become your portfolio’s worst enemy.
So, how did we do?
| For June | 1-year (12-month) Returns: | ||
| Dow Jones: | +0.23% | Dow Jones: | +13.87% |
| S&P 500: | +3.12% | S&P 500: | +21.48% |
| Nasdaq: | +4.87% | Nasdaq: | +25.21% |
| Berkshire Hathaway: | +0.18% | Berkshire Hathaway: | +15.48% |
| Bena Capital Fund: | +9.85% | Bena Capital Fund: | +30.01% |
Some highlights of last month:
- June’s unemployment rate rose to 4.1% up from May’s at 4.0%
- June’s Non-farm payrolls added were 206K jobs down from May’s 218K jobs
- May’s Average hourly earnings up +4.1% Y/Y (up from April’s +3.9%)
- Labor Force Participation for June rose to to 62.6% from May’s 62.5%
- Walgreen’s is shuttering many of its U.S. stores especially in urban areas due to theft
- Target Stores will stop accepting personal checks for payments at the end of July…but will still accept cash!
- CPI (Consumer Price Index) for May, Y/Y is +3.3%
- CNBC: The U.S. National debt is rising by $1T about every 100 days’
- FTX Says Defrauded Customers of Sam Bankman-Fried to be Fully Paid Back
- GM to Shut Down the Chevy Malibu in November
June’s unemployment breakdown
4.1% 6.3% 4.9% 4.1% 3.5%
Overall Black Hispanic Asian White
Source: WSJ / BLS
Cost of Living Crisis
Among middle-income Americans
66% 80% 31%
Middle-Income Americans Eating more Don’t contribute
falling behind financially at home to savings
Source: Primerica Survey, June 27th
So much for ‘fill her up’
1 in 5 or 20%
Electric vehicle charging stations in America do not work
Source: Georgia Institute of Technology & Harvard Business School
Tax Revenues Before and After 2017 Trump Tax Cuts
$3.31 Trillion $4.89 Trillion
FY2017 Receipts FY2022 Receipts
+47.73%
Percentage increase in Revenue
Source: Congressional Budget Office
Is renting cheaper than buying?
Homeownership vs. Renting
Monthly payments as of February 2024
$2,703 $1,979 37%
Mortgage Rent Gap
Source: Bankrate
Holy Cow, consumers get grilled…what’s at steak!
Prices have risen since May 2024 for beef:
+4.9% +6.0% +5.7% +7.7%
Ground beef Beef roasts Steaks Other beef & veal
Source: Pat LaFrieda, Meat Purveyors CEO
Economy is slowing & Unemployment is rising
Unemployment for June is the highest since October 2021
3.7% 3.9% 3.8% 3.9% 4.0% 4.1%
Jan Feb. March April May June
Source: Bureau of Labor Statistics
CNBC:
The U.S. national debt is rising by $1 trillion about every 100 days!
The nation’s debt permanently crossed over $34 trillion on January 4. The U.S. debt, which is the amount of money the federal government borrows to cover operating expenses, now stands at $34.5 trillion, as of last Wednesday. At this rate, the U.S. debt will reach $35 trillion in less than 100 days. Moody’s Investors Service has lowered its rating on U.S. government to negative from stable last November.
Interest costs have surpassed both Defense & Medicare budgets!
$514 Billion $498 Billion
Net interest National Defense
$465 Billion $355 Billion
Medicare Medicaid
Source: Department of the Treasury
Americans Have More Investment Income Than Ever
In the last quarter of 2023wealth held in stocks, real estate and other assets such as pensions reached the highest level ever according to the Federal Reserve! Americans in the 1st quarter of 2024 earned about $3.8 trillion from interest and dividends up from $770 billion from 2020 according to the Commerce Department.
How Much Should You Have Saved to Retire?
According to a Fidelity Investments report
* by age 30: 1 times income
* by age 40: 3 times income
* by age 50: 6 times income
* by age 60: 8 times income
* by 67 (retirement age): 10 times income
Source: Fidelity Investments
I-Bonds rate falls again to 4.28%
The Treasury Department just released the new interest rate for I-Bonds now at 4.28% for the next 6 months. That’s down almost a full 1% point from when it was adjusted 6 months prior to that. The variable yield is adjusted to inflation rate and not the bond market. There are no state/local taxes paid on I-Bonds but there are other stipulations as to redemption rules.
IRS increasing of audits for those making under $200K
Passage last year of the ‘Inflation Reduction Act’, an increase to the IRS was included for $80 billion to hire 87,000 more agents and the promise that this would go towards audits for those making $400K or more. Now, according to the Treasury Inspector General for Tax Administration (page 16) in his August 31, 2023 report says:
“63% of SB/SE Division’s FY2023 total new examinations will be on taxpayers with less than $200,000 TBI.”
Well, so much for believing a politician!!
Look before you fly:
A veteran Boeing engineer has filed a complaint with federal regulators alleging the company dismissed quality & safety concerns during production of its troubled 787 Dreamliner jets.
U.S. Household Wealth
$156 Trillion
Source: Federal Reserve
…and wait, there’s more:
58%
U.S. Households in Q4 2023 holding stocks either directly or through mutual funds
Source: Federal Reserve
$4.7 Trillion
U.S. Household Wealth Gains from Stocks in Q4 2023
Source: Federal Reserve
Stock Ownership by Wealth Group in Q4 2023
86.9% 49.4%
Top 10% Top 1%
Source: Federal Reserve
U.S. Top 1% Wealth Gains in Q4 2023
+49% $8 Trillion
from equities/stocks
Source: Federal Reserve
Walmart is America’s largest grocery store:
(Share of U.S. grocery sales in 2034)
28.3% 10.1% 9.2% 6.4% 4.8% 3.0% 2.7% 2.0%
Walmart Kroger Costco Albertsons Publix Amazon Target HEB
& Sam’s Club & Whole Foods
Top Shopping Websites for Teens
Company/Share
1. Amazon 55%
2. Shein 12%
3. Nike 6%
4. GOAT 2%
Source: Piper Sandler
Tesla, what are you doing to us!
Bena Capital Fund owns a percentage of Tesla shares that are down approx. 30% from YTD. I feel this is a momentary movement (on the down) that will eventually correct. Take a look at the EV market share in the U.S. today:
2024 Q1 U.S. EV Market Share:
52.3% 9.3% 7.5% 6.1% 5.1%
Tesla Hyundai/Kia Ford GM Rivian
Source: Motor Intelligence
BlackRock CEO Sees Budding Global Retirement Crisis
BlackRock’s CEO, Larry Fink sees a global retirement crisis brewing as an aging population is stressing retirement safety nets such as Social Security. Medical breakthroughs are helping people live longer and relying only on a straining Social Security program which is already seeing an insolvency within 10 years.
Jamie Dimon’s Letter to Shareholders
Jamie Dimon last week just released his annual letter to shareholders. Yes, I’m realistic enough to know Jamie Dimon, the CEO & Chairman of JPMorgan Chase, has a wider reach than the Bena Capital Fund’s Letter to Shareholders. In it Jamie said that AI (Artificial Intelligence) will have as profound an impact on society as….computers, the printing press,… and electricity!
Car insurance up YOY +22.2% top reasons:
* Vehicle repairs up 3.1% month over month
* Car & truck rentals up 5.7% month over month
National average gas prices
$3.619 $3.608 $3.549 $3.394 $3.604
Current Yesterday 1-wk ago 1-mon. ago 1-yr ago
Source: AAA
President Joe Biden’s Fiscal Year 2025 Budget Proposal
$7.3 Trillion $5.5 Trillion $1.78 Trillion
Budget spending Tax revenue Adds to Federal deficit
Source: White House
Inflation under Biden
(January 2021 – Feb. 2024)
+21.2% +21% +29.6% +22.7% +20% +28.4% +30% +20.3% +31.4%
Groceries Eating out Baby food Pet food Rent Electricity Nat. gas Used cars Airfare
Source: BLS
…more inflation under Biden
(January 2021 to February 2024)
+12% +31.4% +41.96% +46.62% -2.11% +4.11%
Apparel Airfare Gas prices Credit card Real hourly 30-yr. mortgages
debt wages
Source: BLS; St. Louis Fed; AAA; Freddie Mac
Not all things have gone up:
(January 2021 to January 2024)
-26% -2%
Home sales Real wages
Source: BLS; Fed. Reserve Bank
Percentage of those taking early 401(k) withdrawals due to economic hardships going up?
(2020 through 2024)
2.0% 2.2% 2.8% 3.7%
2020 2021 2022 2023
Source: CNBC; March 11, 2024
We don’t have an income problem; we have a spending problem.
The new $1.2 Trillion spending bill:
- $2.5 million for two hospitals that will perform late-term abortions.
- $1.8 million for LGBQT+ senior citizen living homes
- Sen. Chuck Schumer (D-NY) added $1.5 million to encourage kids to play video games
- Sen. John Fetterman (D-PA) added $368,000 for a ‘Built By Us’ radio podcast.
- Sen. Tammy Baldwin (D-IN) added $2 million for illegal aliens to see psychiatrists
- Sen. Elizabeth Warren (D-MA) added $1 million to boost ‘LatinX’ small businesses
- $880 million for ‘enhanced border security’ in the Middle East (none for our own southern border)
- $1.1 million for ‘climate resilience and equity’ in Boston, MA
- $1.6 million for EV busses on Cape Cod
- $4 million for an ‘economic justice’ lab in Connecticut * $15 million for Egyptians’ college tuition
- Sen Jeanne Shaheen (D-NH), $2.5 million for a kayaking facility in New Hampshire
- Sen Lisa Murkowski (R-AK), $4 million for ‘Alaska King Crab Enhancement Project’
I’ve been asked to repeat this from our March’s Partner’s Letter, so:
History has shown that some months are kinder than others to investors.
According to records spanning over 95 years, since 1929:
Months with the biggest gains: Months with the biggest losses:
January, April, July & December February, May, August, September
The S&P Rises 3 out of 4 years since 1926!
The S&P is up approx. 75% of the time going all the way back for almost 100 years (since 1926)!
| S&P | % advance each year |
| 20%+ | 36% |
| +10% to +20% | 21% |
| 0 to +10% | 15% |
| 0 to -10% decline | 15% |
| 10%+ decline | 13% |
Source: Dimensional Funds
Have you moved?
If you have moved or changed addresses to where your 1099’s should be sent, please contact me with the new information.