Update - March 30th at 9:00 A.M.
A lot has happened since the report issued on March 12th.
The data is as follows:
| Market | Our Portfolio | |
|---|---|---|
| 2008 | -39% | -5% |
| 2009 | -6% | -0.8% |
The last report was issued after the market experienced a dreadful January and February to compound the trauma of 2008. At that time I was, for the first time for a long time, adding significantly to our holdings at mouthwatering prices. In rather short order I added 15%+ to our stock/energy/real estate holdings and the market, which was heavily oversold, cooperated by staging a vigorous, and long overdue, rally. The rapid increase has tempered my short-term enthusiasm and we have sold heavily into the buying panic. This is all a far cry from the mantra of "buy and hold" that was part of the accepted wisdom of the market as recently as 2007. Although we are strictly adhering to our basic value principles we have adapted to this new, schizophrenic, environment.
There is widespread distress in the professional investing community and the nearest way I can describe the public investor mood is something akin to post-traumatic stress syndrome. This creates the current environment of wild swings, hope and despair and irrationalities that abound in all sectors of the market. It is full in equal parts of opportunity and extreme danger and uncertainty. We will continue to be cautious as we navigate these tricky waters.
Essentially Wall Street in a rather cynical fashion, aided and abetted by various Governments and the banking community plundered the savings of the American public. I will have much more to write about this in the future and, sadly, the plunder continues through the various "rescue" plans. The general concept seems to be to obfuscate the truth, reward the reckless and the powerful and add to the burden of the prudent and the innocent. It makes my blood boil.
It is worth mentioning that the average market participant needs an increase of 80-90% in their portfolio to reach their starting point in 2008. We are in the fortunate position, relatively, of having thus far escaped nearly all of the carnage. We will continue to be extremely risk averse and to focus on the avoidance of permanent capital loss. This does NOT mean that the portfolio will be free of fluctuations and, in fact, we hope it isn't as fluctuations provide opportunities.
To summarize:
- We will remain calm.
- Expect portfolio fluctuations. They are a normal part of the process. I usually respond to declines by making additional purchases.
- Our basic value methodology is unchanged.
- Unlike Bernie Madoff, we do not have custody of your funds so we can't abscond with your money.
- Our money is invested, in its entirety, in exactly the same fashion as the portfolio.
Please call or email us if you have any questions or concerns.