Following a 6.6% decline during May, the Standard & Poors 500 Stock Index enjoyed a 6.9% recovery during June. In our May letter, we noted that without exception, every one of our portfolio holdings met or exceeded their targets for first quarter revenues and profits, as forecast by a broad consensus of Wall Street analysts. Accordingly, despite the widespread decline, we made no changes in our positions, for which we were rewarded as the Index rebounded to an all-time high at the end of June.
The second quarter is now complete, and during the next few weeks, corporations will report their Q2:19 results. Because a number of data releases during recent weeks have pointed to a slowdown in the entire global economy, including the U.S., we do not expect particularly robust results, but there are already a few signs that the U.S. and other major economies are bottoming out. Accordingly, revenue and profit results in the second half of 2019 should see an improvement, and overall valuations seem reasonable especially in light of the current level of interest rates. More important, our holdings encompass the fastest growing sectors of the U.S. economy, including technology, healthcare, social networking, etc. In the meantime, as we have discussed previously, the financial markets will continue to be volatile, as investors must contend with a raft of geopolitical factors, including the tariff wars with China and the EU, plus the cockeyed proposals being put forth by candidates for the Democratic nomination for president. In addition, there are the ongoing tensions with Iran and North Korea, and the likelihood of a "hard Brexit," as well as the crisis on our southern border.
Nevertheless, investors should bear in mind the remarkable ability of our major corporations to adjust and adapt to these distractions, and the continuous evolution of technological advances that continue to create new and significant investment opportunities. We remain highly convinced of the profitability and growth potential for our major holdings and expect no significant changes in our portfolios over the months ahead. Needless to say, if circumstances warrant, we will communicate our thinking promptly to all clients.
