July 2021

I had another very solid month with a return of 3.16%. The S Fund continues to generate incredibly strong returns, and the C Fund is still solid as well. My one caution to everyone is to not get used to these types of returns. The average S&P 500 returns outside of these abnormal years and in non-recession years is at best 8%. At some point, there will be a reversion as our economy and the companies in the S and C Funds are not growing at 20-30% a year. Rather, we are seeing the effects of the inflationary monetary policy moving liquidity to the markets and into stocks. The reports continue to come out about inflation and whether it is transitory or permanent. If it is transitory then, by nature we would expect deflation in a transitory sense as well. In either scenario, transitory or permanent-both are not good. At some point, the Federal Reserve will have to act when the velocity of money or the amount of money in circulation reaches a tipping point. What that tipping point is, is still anyone's guess. I am of the belief that any interest rate hikes are still several quarters away. We are in a recovery mode, and unemployment benefits are still preventing full employment. There will be a hesitancy to raise interest rates until the IS-LM-FE curves are in better alignment. As a result, I'm still in the market for the C and the S Funds. I think the S rally will start to level out (especially over the summer), while the C Fund will continue to be decent. Have a great Independence Day holiday and long weekend! Keep investing!