2022 July CAD
-1.61%
MTD
.77%
YTD
Monthly Performance (net of all fees)
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 1.15 | 1.02 | .93 | .10 | -1.61 | .82 | -1.61 | .77% | |||||
| 2021 | 3.40 | 3.99 | 3.75 | 1.27 | 1.30 | 1.54 | 0.22 | 1.51 | 4.89 | 3.70 | 0.50 | 1.20 | 30.78% |
| 2020 | 0.41 | -.20 | -1.91 | .74 | 1.66 | 2.25 | 1.26 | 3.13 | 1.10 | 0.57 | 2.04 | 3.15 | 15.02% |
| 2019 | 1.72 | 1.79 | 3.13 | 1.15 | 1.35 | -0.75 | -1.54 | -1.34 | 0.04 | -1.45 | -2.57 | 1.39 | 2.76% |
| 2018 | 6.36 | 4.81 | 0.95 | 0.71 | -0.85 | -1.07 | 2.50 | 1.69 | 3.53 | 0.67 | 0.02 | -0.18 | 20.58% |
| 2017 | 0.27 | 0.05 | 0.35 | 0.25 | 1.39 | 1.45 | 1.77 | 0.12 | 3.27 | 3.61 | 13.96 | 1.96 | 31.51% |
| 2016 | 1.59 | 3.30 | 1.53 | -0.82 | 5.67% |
Risk vs. Return Comparisons Across Indexes
| Month Return | YTD Return | Volatility | Sharpe | Sortino | Beta | Best Month | Worst Month | Annualized | |
|---|---|---|---|---|---|---|---|---|---|
| Caravel | -1.61% | .77% | 7.97% | 2.09 | 7.13 | 1.00 | 13.96% | -2.57% | 17.61% |
| S&P 500 | 9.22% | -12.59% | 16.06% | 0.87 | 1.19 | 0.07 | 12.82% | -12.35% | 13.52% | S&P/TSX | 4.66% | -5.65% | 13.68% | 0.66 | 0.66 | 0.07 | 10.79% | -17.38% | 8.4% |
The Good, The Bad, and The Unexpected
Dear Partners,
For the month of July, the Caravel Capital fund returned -1.61%, bringing the total net return for 2022 to 0.77%.
The Good
We completed last month’s letter as we began deploying capital with some tempered optimism.
The Bad
The next day, global stock markets began a 10% run as American, European, Australian, and Canadian central banks all had members speak publicly, hinting at the possibility of peak inflation being behind us. This was accentuated (and then accelerated) by the Jerome Powell speech on July 27th, when he echoed the same sentiment.
The Unexpected
As financial assets ran, we tried desperately not to panic, which is likely why we only lost what we did. We don’t manage the portfolio with a 10 or 20-day window, and as we mentioned in our last letter, the odds of us catching the turn after dodging a 20% drop were slim to none, and I am here to say Slim left the party on July 19th.
So where to now?
We now see validation that the days of 8-9% annual headline inflation are abating and will likely be closer to 5% in 12-18 months. A sixth-grade education in math would explain how this occurs. However, the declining inflation narrative could be upset by possible exogenous events, which is why passing grade 6 does not qualify you to manage money.
We feel the last 27-day move has been driven primarily by a fear of missing out (more popularly known as FOMO). We have no problem with that; we never have and never will. We are hopeful that market participants will have more clarity from the bond market, the currency market, and corporations as time passes.
We will leave you with this – we haven’t lost a cent of your capital this year, unlike all major indices, due to our unwillingness to follow the herd. We don’t plan on changing our approach now. Like everyone, we love a good bull; we just don’t buy Bulls#!t (you know). Statistically, the worst three-month stretch for markets, August / September / October, is upon us….let's see what history has in store for Mr. Market.
If you would like to discuss anything or just say hi, we love catching up with our partners any time.
We thank you for your continued confidence and capital,
Jeff and Glen.