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The month that was:
May was a great month for the stock market. The Nasdaq went up by almost 10%, the S&P 500 went up by about 6%, and the Dow went up by about 4%. On May 12th, the U.S. and China agreed to lower their tariffs on each other for 90 days, and the S&P 500 jumped more than 3% that day. By the end of the month, the S&P 500 had recovered all of its losses since Liberation Day.
On May 7th, the Fed kept interest rates the same for the third meeting in a row. On May 16th, Moody's lowered the credit rating of the United States from Aaa to Aa1, which is like going from an A+ to an A, because of the growing government debt. As I explained in my August 2023 newsletter, Fitch did the same thing two years ago. Now, none of the three major rating companies give the U.S. their top rating. The market fell a little at first, but it recovered quickly.
The worst stock of the month was UnitedHealth, the biggest health insurance company in America and a company in the Dow. On April 17th, UnitedHealth cut its forecast for the year, which it almost never does, and the stock fell 22% in one day. Then on May 13th, its CEO quit, and the company canceled its forecast completely because its medical costs were rising so fast. Two days later, a report said that the government was investigating the company for possible fraud. By the middle of May, the stock had fallen about 50% in just one month.
UnitedHealth was considered one of the safest stocks in the market. It had raised its dividend for 15 years in a row and grown its profits steadily for many years. Its crash shows that no single stock is completely safe. This is why I never put too much of my money into one company. If one of my stocks crashes, it hurts, but it doesn't ruin my whole portfolio.
Buys -
Bought 3 UNH at $289.48
After its big crash, UnitedHealth was trading at its lowest price in about five years. UnitedHealth still has millions of customers, and its old CEO, Stephen Hemsley, returned to fix the company. I started a small position, but I kept it small because there is still a lot of uncertainty.
Bought 7 DECK at $107.49
I added more shares of Deckers. On May 22nd, Deckers did not give a forecast for the year because of tariffs, and the stock fell after the report.
Sells -
Sold 2 ANSS at $345.98
Ansys makes engineering simulation software. Synopsys agreed to buy Ansys last year, and the deal is close to being finished. I sold some of my shares.
Sold 1 MLI at $79.53
I sold one share of Mueller Industries.
Buys and Sells -
Bought 2 TMO at $411.61
Sold 2 TMO at $400.07
Thermo Fisher makes equipment and supplies for science labs and drug companies. I bought two shares, but sold them a week later for a small loss of about 3%, because I was worried about government cuts to science research funding.
This month, I made fewer trades than in the past few months. Most of the stocks I bought during the panic in April went up a lot in May, which reminded me that patience is often rewarded.
Thanks for reading my newsletter!