I love my clients! Shortly after the market closed, on one of the wackiest days in memory, I shot out a reassuring e mail to my clients (reprinted below). Here is a sample of the responses that came back from some of them:
“Wow! From my perspective you wrote the following and responded in less than a minute from the time I sent my email to you! “
“Stay with it! You’re the man!!!”
“I know you are on the job, and I trust your judgment. I rode out 1987 with you.”
“Thanks for the info you have been sending today Gary. We have been trying to keep up with everything, but it is great to hear your explanations. You certainly express yourself extremely well.”
Aren’t I somethin’ !?
But really, it feels good for me to know I’m needed and respected for the work I do.
Now, for your interest, is my perspective on what is going on in the markets from the above referenced e mail sent to clients earlier today:
“I thought a brief note would be in order, given all the panicky talk in the financial media. The primary cloud over the financial sector and perhaps beyond is sovereign debt risk in certain European nations, Greece prominent among them. Your portfolio has generally avoided risky debt and preferred stocks, except for small positions that may be part of a recently purchased Satellite Strategies fund. Default by a nation or nations will likely hurt some of your holdings, perhaps, but none appear to be overly exposed to this event. The banking sector, represented by preferred stocks, is perhaps the most vulnerable to earnings losses, but I’ve seen nothing that suggests solvency of the banks, whose preferreds we hold, are in danger of default.
The more immediate issue is confidence. Back in 2008, we saw people selling perfectly sound businesses in their haste to run to the imagined safety of US Treasury bonds and money market funds. Despite the fact that the USA is among the nations whose debt-to-GDP ratio is highest, many have remained so positioned. Those who remained are safely earning something at or below 1% per year, and their assets remain virtually unchanged from late 2008. By contrast, our clients, in general, regained all they had lost from that period, as recently as a month ago. CD’s and T-bonds may be an appropriate place for short term money, but not for long term investors. Please recall that over the 8 plus years we have managed money, we have significantly out performed stock markets, with a lot less “jiggle”. As always, I see my job as positioning you in such a way that when others freak out, you do not feel compelled to put your money, figuratively, into a mattress.
True, the markets are nervous, and I view this as likely an opportunity. We had a great example of a bizarre “freak out” today. As I’m writing, it appears some trader at some investment house pushed the wrong button. This resulted in a massive liquidation of stocks that make up the major market indices, Proctor & Gamble among them. It did not stop with this one trade. Apparently the crowd of computerized crazies who have no concept of long term investing saw their software react to the initial error by lowering buy bids or by outright selling and a robot driven collapse in share prices resulted, akin to the 1987 crash. Today’s event was as welcome as a PETA protester at a furrier’s convention, what with nervous talk about “contagion” and a repeat of the 2008 crisis, European style.
As some of you know, I’ve taken off a couple of positions, raising some cash in the past few sessions, but only due to the particulars of the holding sold, not due to some conviction that “the sky is falling”. I’ve heard that prediction from others for about 20 of the past 36 years. Our most recent buy, for many clients was a bet on one of the more sound economies, Canada, which has abundant minerals, energy, conservative banks and a relatively small government debt.
You own what I believe to be solvent, market dominant, well run businesses. The headlines du jour will come and go. What usually remains standing are good companies.
I am looking to purchase some good businesses that got away from me during the frenetic rally of the past few quarters, and the current sell off may present an opportunity to position at good prices.
Remember, markets are a swirling sea of change, but good investments, like a life preserver in a storm, will float to the top.”
