Annual Report - January 15, 2009
This is a report of the portfolio performance in 2008. The rates of return reflect the overall rate of return on all the funds that I have managed since 1981.
Statistics
Details of the overall portfolio are as follows:
| Portfolio Return-actual | -5.1% |
| Portfolio January 1, 2008 | $116.50 million |
| Portfolio January 1, 2009 | $110.90 million |
| Investment earnings 2008 | $5.9 million |
| Investment Earnings 1981-2008 | $67.40 million |
Details of the individual years are as follows:
| Average 28 years |
|---|
Discussion
I condensed our 28 year history into two year blocks of time because our data was becoming unwieldy. The annual data is available in our last annual report on the website.
The key facts are:
- Our compounded rate of return over the entire period was 10% p.a.
- Our expectation through time was that we would achieve a rate of return that would exceed the rate of inflation by 5% p.a.. This would have suggested a compounded rate of 8% p.a. We obviously exceeded our target.
At the time it seemed our target, to many observers, would be easily attainable. After the Crash of 1987, the technology crash and the current debacle it no longer seems such an easy target. It is my belief, in fact, that most investment portfolios have made little, if any, headway in the last 10 years and that returns over the last 15 years are remarkably modest.
Our goal of earning inflation plus 5% p.a. has been an integral part of our planning process. We will be very satisfied if we can achieve similar results over the next 28 years. I wrote this in last years report:
“The first week of 2008 was the worst start to a financial year since 1932 ……I expect to see additional turmoil and uncertainty throughout the year with the continuation of the crises that have roiled the bond, housing, currency and stock markets. The outcomes are unknown, but I will continue to use all my experience and caution as I attempt to navigate these tricky waters. We still have a very conservative posture, but it is not risk free. I believe it offers the best combination of potential gain coupled with the absence of financially life threatening risk. I think most professional portfolios, as currently constituted still have unacceptably high levels of risk IF some of the more dramatic scenarios unfold”.
Well that was 2008 and those scenarios did unfold. :)
My goal, as always, is to live to fight another day, I take the responsibility of managing your finances very seriously and I thank you for your ongoing trust.
This report will be included as part of your printed investment policy statement, which will be delivered in the next two days. The investment policy statement will go into great detail about every aspect of our approach to investing and it will cover personal aspects of your portfolio . Questions are always welcomed. We all wish you the happiest of New Year’s and a peaceful and healthy 2009.