2018 3rd QUARTER LETTER

Posted by on Oct 4, 2018 in Quarterly Letters |

October 4, 2018   Dear Investor,   The only stocks going up this year are U.S. stocks—on the back of Trump’s corporate tax cuts, which have increased earnings at domestic companies. But the effect of this tax break is already well baked into stock prices and U.S. stocks are now dangerously overvalued, trading at 18 times forward earnings and 25 times trailing earnings. Meanwhile, our higher weighting of international stocks, which...

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2018 2nd QUARTER LETTER

Posted by on Jul 2, 2018 in Quarterly Letters |

July 2, 2018   Dear Investor,   The words don’t look insidious: “My hope is that the Fed, under its new management, understands that more people working and faster economic growth do not cause inflation.” But they come from Larry Kudlow, who works for the White House as Director of the National Economic Council. This makes them dangerous words indeed. Traditionally, the White House has wisely abstained from bullying the Fed. As a...

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2018 1st QUARTER LETTER

Posted by on Apr 4, 2018 in Quarterly Letters |

April 4, 2018   “[T]he passage of the present bill [to enact tariffs] would not only increase the cost of living but would react unfavorably on our foreign trade and do much to counteract the good-will among nations which other departments of the government have striven for through diplomatic channels and peace conferences.” — The New York Times   Dear Investor, To loosely paraphrase George Santayana, those who do not...

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2017 4th QUARTER LETTER

Posted by on Jan 2, 2018 in Quarterly Letters |

January 2, 2018   Dear Investor: Given the astronomical gains last year, many clients have understandably asked if they should purchase some Bitcoin. I would say no. Not because it’s a mania, a novelty, or a fad—though it certainly might be all of those things. I would say no for the same reasons I advised against buying companies like Pets.com in 1999. Not because it has no value, but because the value cannot be determined. I have no idea...

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2017 3rd QUARTER LETTER

Posted by on Oct 4, 2017 in Quarterly Letters |

October 10, 2017 Dear Investor: Famed investor Peter Lynch used to cite the “quiet facts”: the items you would read buried in the back pages, relinquished to a supporting role by the frenzy of breaking news. Today the world focuses on Trump, North Korea and hurricanes, all of which inhabit the front pages. There is no avoiding that loud reality. But the quiet facts still coexist, lonely and neglected, just waiting for value investors to pay...

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2017 2nd QUARTER LETTER

Posted by on Jul 5, 2017 in Quarterly Letters |

June 30, 2017   Dear Investor: In the short term, markets react to nearly everything—or to nothing at all. In the long term, only one thing matters: the growth rate of earnings, relative to interest rates and the price paid. Traders, pundits and speculators waste their time trying to predict things like political machinations, macro themes and Federal Reserve policy. These things are unknowable. The investor, by contrast, buys good...

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