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Year-end 2009
On December 31st, we will have completed the first decade of this century and millennium. Think about what we have all experienced in the last 10 years: Y2K without systems collapses; the end of one of the greatest bull markets, two of the four worst markets in history; terrorist attacks on our soil; war in Iraq and Afghanistan; oil prices going through the roof; the acceleration of global warming; the…
Quarterly Thoughts – Q3 2009
During this Global Financial Crisis or “Great Recession,” the foundations of Wall Street and the global financial system were shaken by the collapse of Lehman Brothers, the vanishing of Merrill Lynch as an independent entity, and the take-over of AIG by the government, amongst other events. Roughly six months ago, on March 9th when the Dow Jones Industrial closed at 6,547, the press and average investor felt as if the…
Quarterly Thoughts – Q2 2009
In recent quarters, at the height of investor concern about global economic and market malaise, we reminded you that the market often rebounds significantly after dramatic declines, and that market recoveries usually begin before economies heal. The results of the Second Quarter of 2009 bear this out, as part of what we believe is the beginning of the recovery. For example, the S&P 500 Index and MSCI Emerging Markets Index…
Quarterly Thoughts – Q1 2009

That’s one “mean reversion!” If historical 10-year average cycles are any predictor, now is not the time to abandon long-term strategies (see chart). The response to excess in the form of the dot-com-bomb and the credit-crunch-chaos caused the last 10 years to be one of the worst in U.S. history. However, notice that weak 10-year periods always overshoot the mean, and are often followed by strong recoveries (i.e. your friend,…
Quarterly Thoughts – Q4 2008
The Chinese character for “crisis” is actually a composite of two other characters: “danger” and “opportunity.” Current financial markets are volatile, but also provide opportunity. By rebalancing portfolios, investors “buy low” and “sell high” systematically. At a time when stocks are “on sale,” by not selling, we are in effect “buying” at possibly bargain prices. Discipline pays off over the long haul.
Year-end 2008
It has been said that pilots are paid for “takeoffs” and “landings.” The recent “Miracle on the Hudson” is a reminder of the value of proper process and guidance during freak-events. A flock of birds flew into a jetliner’s engines rendering the engines useless, but a pilot with a lifetime focus on risk management successfully landed the plane in the Hudson River. It was a frightening, and there were minor…
Quarterly Thoughts – Q3 2008
Markets continue to be difficult. However, panic can damage long-term profit. As Burton G. Malkiel, professor of economics at Princeton University wrote recently in The Wall Street Journal, “Just because stock markets have panicked, investors should not. A century of investing experience, as well as insights from the field of behavioral finance, suggests that investors who bailout of equities during times like these are almost always making the wrong decision.”…
Quarterly Thoughts – Q2 2008
The Bear market has officially arrived, as measured by S&P 500 dropping 20% from its peak. There have been 31 bear markets since 1900, averaging one every 3 or 4 years. According to Standard and Poor’s Equity Research, we have experienced nine bear markets since 1956. They have varied in magnitude from the decline of 20% in 1990 to the drop of 48% in 1973-1974 to the plunge of 49%…