Quarterly Commentary
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Quarterly Commentary |
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The following is a copy of our first quarter 2010 letter to clients. April 29, 2010
Dear (Client), The tone of the stock market has greatly improved and the major averages have recovered a great deal of their declines from record highs. Over the past year the S&P 500 has risen 50%. Our client accounts in total have gained only 17% in the same 12 months. However, because our client accounts never experienced the declines in the major averages, they have outperformed the S&P 500 over three, five and ten-year periods. Over 20 years our client accounts, in total have enjoyed 86% of the S&P 500's gains with only 36% of the risk. It's easier to achieve longer term gains when your investment vehicle resists declines. The economy seems to have righted itself as well. Though unemployment remains high it is a lagging indicator and typically improves well after the overall economy has turned around. Many people will be dismayed by the news now emerging on the roles some Wall Street firms purportedly played in helping to create, and then deflate, the bubble in housing and in the U. S. economy as a whole. We expect the government regulatory agencies to be successful in bringing to justice at least some of those guilty of breaking the law. However, as you likely know, regulations typically lag behind the creativity of those bent on gains at any cost. New rules beginning to emerge from Congress and the regulatory agencies will be designed to prevent the repetition of past excesses, though they may do little, if anything, to prevent the next. The need for prudence continues. Our goal continues to be to provide you with moderate growth, generous income and low risk. As our investment returns over the past decade demonstrate, sometimes the tortoise can outrun the hare. Sincerely, Marilyn V. Brown, CFA President
*Please note the letter to clients referred to returns before fees. |
