Q3 2018 Commentary
Your Timothy Plan Growth and Income Fund (TGIAX) returned -0.05% in the third quarter of 2018. The equity portion of the portfolio positively contributed to performance. The stocks we held in the Industrial, Financial, Basic Material, and Utility sectors also positively contributed to performance.
Concerning the current environment, we are in a period where our approach is producing less return than we would like to see. We are disciplined and have not changed our basic methodology. We look for undervalued companies with excellent and growing earnings whose price performance has picked up relative to the market as a whole.
We are in a period of upside down results. In the last quarter, for instance, those stocks which were the most expensive, had poorer earnings and had been underperforming previously, outpaced those stocks with the favorable characteristics. This is not sustainable over the long term and is often a sign of market imbalance.
Trade deals, lower taxes, deregulation and stock buy backs have boosted the stock market. At the same time the Fed has been raising rates and bond yields appear to be heading higher. A narrow band of stocks has been leading the market and we are in a tug of war. On one side is a mania like approach many are taking while insiders are selling shares at an accelerated pace.
On the other side is a solid economy, great earnings and the long term momentum of a rising market. Despite the recent set back, momentum is still favorable. However, when it shifts we can expect the market to take a radical turn toward more conservative tactics.
We continue to buy companies with strong earnings, good valuations, and relative price strength. Your Fund remains well diversified as we strive to provide shareholders the opportunity to grow their capital while maintaining a strong focus on preserving capital. We believe an actively managed balanced approach should be beneficial to investors in the future.