Commentary Archive

The Recovery and Stock Prices
(Apr - 2012)

The Most Important and Misunderstood Idea in Investing
(Jan - 2012)

The Past as Prologue
(Oct - 2011)

One Foot In,
One Foot Out
(Jul - 2011)

The Forest from the Trees of Investment Returns
(Apr - 2011)

Lessons and Myths
(Jan - 2011)

Fate of the V Shaped Profit Recovery
(Jul - 2010)

Valuations and Path Dependence
(Mar - 2010)

The Old Normal
(Dec - 2009)

The Wrong Thing
(Mar - 2009)

Caution to Courage
(Jan - 2009)

Same Story, Different Channel
(Jan - 2008)

Risk Control
(May - 2007)

Navigating
(Dec - 2006)

Uncle Myron's Afro
(Dec - 2005)

Revenge of the Bubble
(Dec - 2004)

Patient Investing
(Nov - 2003)

Market Psychology and Economic Facts
(Jan - 2003)

Rip Van Winkle
(Sep - 2002)

Market Conditions: Summer of 2002
(Jul - 2002)

Events of 9/11
(Sep - 2001)

Introducing Mr. Market
(May - 2001)

Growth at Any Price?
(Aug - 2000)

The Worst of Times
(Feb - 2000)
 

Commentary

Events of 9/11

The events of this week have shocked, angered, and saddened our nation. The stories of personal loss have been heart wrenching. The uncertainty of a fanatical and faceless enemy has caused fear.

The emotion we feel for this terrible tragedy, though, must not be carried into our financial decisions. Financial decisions must be made objectively and rationally.

In our opinion, no financial decisions or strategy changes are necessary in response to this week's events. We would not have made changes even if we had known of these events in advance. The stock market's reaction, when it re-opens on Monday, is not of concern either. The long run economic impact, if any, is what matters.

The following fact must be considered when evaluating the economic impact of Tuesday's attack: the economy has continued to grow at a consistent long-term rate regardless of adverse conditions and events. Extreme deflation, extreme inflation, four major wars, two world wars, a presidential assassination, oil embargos… The result? Stocks and bonds of quality enterprises purchased at reasonable prices continued to produce satisfactory long run returns.

A primary requirement for such returns is that our government and economy continue to exist – understanding that economic existence and return on capital are inseparable. The United States of America, in our estimation, is not going away anytime soon. If anything, we stand more united and stronger today than ever.

Another key requirement for such returns is investment quality. We only purchase securities that can withstand difficult economic conditions, and we diversify investment portfolios because there are no guarantees.

Our policies will not protect against market fluctuations in the short run. They are designed to provide satisfactory returns in the long run. They are designed knowing that history, full of adversity and uncertainty, is bound to repeat itself.