Holiday Letter

I am always amused at this time of year as economic and market predictions are touted by “experts”. Last year, Fortune predicted the market would rise over 12%, that “mom jeans get hot” and “football helmets get a lot more futuristic.” The Atlantic offered “4 expert predictions for the global economy in 2015” including that the U.S. faces a debt “reckoning”. If we ever went back to check (though most don’t), we would quickly realize the difficulty and folly of forecasts. As the fortune tellers begin their year-end prognostications – particularly those from the serial doomsayers continually foretelling of the economy or country’s imminent demise – my recommendation is to take them with a giant grain of salt and instead curl up with a good book, enjoy the NFL playoff hunt, college bowl games or spend time with family and friends.

CNBC, Bloomberg and other media outlets sell air time extolling the importance of minute by minute and day by day market gyrations. Charlatans selling market timing and magic mathematical formulas abound. It is part of our human nature to want an easy solution to investing. Investing, however, is hard work and demands a great deal of patience particularly when market forces and the herd are moving against you. At Altrius however, our culture is that of the long term, patient investor. Importantly, our value process also emphasizes dividends which allows our clients to be paid while patiently waiting for stock prices to achieve their full value.

In the short term, stock prices are impacted by emotions and individual investors and Wall Street institutions often act as a herd fleeing away from (as is the case this past week) or moving into stocks. It is important as shareholders that we remain focused on the long term value of the businesses we own and not treat them as certificates to be traded on a daily basis. No one can predict the short term and it is pure speculation (contrary from investing) to attempt to guess the direction of stock prices – though entire industries on Wall Street and television purport to be able to do so. Instead, as fundamental investors we believe that over the long run security prices tend to reflect the future cash flow generated by the underlying business – which will eventually be reflected in a higher share price and/or distributed as dividends.

Inevitably, we will undergo periods of underperformance in relation to some arbitrary index while also suffering real and absolute losses. However, resisting the temptation of herd-like actions is likely the most important part of our jobs. Study after study has shown that the average investor has continually underperformed the market due to selling when prices move lower or because the investor “feels nervous” about the market or economy – then subsequently purchases again after markets have moved higher. One of the most rewarding aspects of my job, and the primary responsibility of our advisors, is to educate our clients about the quality of the companies we own and the cash our investments generate. This cash flow may be used to fund your retirement or reinvested into more shares of these terrific companies. By leading our clients to better long-term decisions, to tune out the short term noise and focus on your longer term goals, we add value likely far above that of stock and bond selection. This is in the end the most rewarding aspect of our profession and the difference between your future retirement success or failure.

During this holiday season, I am most appreciative of the trust you’ve placed in our firm and the responsibility you’ve entrusted in us to help you realize your life’s dreams and goals. I’m very thankful for the opportunity and humbled by the privilege. Please don’t hesitate to call or email should you have any questions regarding our investment strategy, economic outlook or your personal financial circumstances.

Have a wonderful holiday season!

 

Download Our Free White Paper To Learn More About the Importance of Dividends for your Portfolio!

The Merits of Dividend Investing Free Download

 

 

 

 

Back to Blog