After one of the wildest weeks in the history of investing, we feel it is not necessary to try to re-hash the causes of the volatility. We do think it is necessary to reiterate that while the particular circumstances of financial crisis invariably differ, the outcomes tend to be fairly similar. In sharp market declines, bottoms usually are punctuated by panic selling. We think if this past week didn’t fit that description, it was very close. Federal, and in this case, world governments responded aggressively to the crisis. During this period, business’ and even banks fail in the process. This is a normal and healthy part of business. As illustrated in the graph below, stocks eventually reverse course and the economy and confidence improves.
During the course of these declines, we fret and have restless nights just like everyone else. But we do not stray from our investment disciplines. While we do constantly analyze and make adjustments to our strategies, our philosophy has proved to hold up well in volatile market conditions. We will not let temptation and emotions drive our decisions during these volatile times.
We are confident in our philosophy and strategies as they have been applied through multiple declines over the years. The problems that caused this downturn will be addressed and the decline will end. Valuations are so cheap now and cash is at such high levels that the rebound to come may be quite significant. In any event, we will continue to apply our knowledge and experience to best position you for the years to come.