Manager’s Letter 2014 Q2

January 25, 2016

Sargon Y. Zia, CFA

Chief Investment Officer, Portfolio Manager

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There’s been no shortage of media superlatives in recent months as “the market” has made new highs. The “rest of the story”, to borrow Paul Harvey’s famous line, is in the small cap’s which are an important indication of market health in terms of breadth.

The left chart describes year to date performance of small caps relative to large. Both indices moved together in the first quarter, but the decline in the second quarter has been all small companies as money rotated into large. I think that technically the small companies are still in a correction. The right chart shows the S&P 500 index moving to new highs but participation dropping off since May 2013 as more S&P companies fell below their 200-day moving average. This indicator appears to be recovering somewhat.

Source: as of the close on July 15, 2014

Warm Regards,
Sargon Zia, CFA
July 15, 2014

Note to reader: Published quarterly, the Manager’s Letter series primarily communicates the author and Chief Investment Officer’s personal opinion on the markets. This article was originally written in October of 2015 and is provided to offer continuity and context for future articles.


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