I am sure it was difficult to avoid the horrendous financial news in October, which was almost as ubiquitous as the incessant political chatter.
 
            The month of October was a month of records in the financial and economic sector and they were, universally, of an unpleasant nature. The financial crisis, which has roiled the market with growing intensity showed few signs of abatement. The month was the worst in 50 years and was very close to being the worst month ever, but it was saved by a rally in the final week.
 
         The AVERAGE stock fund declined 19% in October as the market carnage exceeded the damage done in the technology crash of 2000-2. In those years there were places to hide, but in 2008 there is no place to hide, except cash, and sadly cash is a very poor alternative except in the very short term. Even the conservative diversified funds have suffered mightily in 2008 including the two biggest and the best - Vanguard Wellington and American Funds Balanced. The same is also true for two of the widely recognized stars in the value field- Longleaf and Third Avenue. Here are some of the details for 2008 and for the period since the October 2007 high:
 

 
        This year has been a continuous struggle and I expect the chaos to persist. I hate to have negative returns but they are, unfortunately, part of the process and the key is to maintain a consistent longer term strategy in the midst of the chaos. The portfolio has been, and will probably remain, very active as I manage the extreme volatility. I am very encouraged by the values that currently exist in the marketplace, but I do expect that the months ahead will be challenging. The good news is that it is in these periods that we usually do most of our very good and cheap buying, which benefits us as things become calmer and values return to normal. This isn't, of course, a guarantee, but it has some historical relevance in the years following the crash of 1987 and the technology debacle in 2000-2.
 
        My basic conservative value strategy remains unchanged. Please feel free to call if you have questions. I am, and will remain, calm.