Scorecard # 29 – The Bear
COVID-19 pulled a bear market out of hibernation and humanity took its place.
Scorecard # 24 – Facebook Redux
The Value Fund returned +5.3% in 2018 net of fees and expenses (or approximately +7.1% gross). We managed to outperform both of our benchmarks in 2018. The S&P/TSX Total Return Index finished down -8.9% for the year. The S&P500 Total Return Index was down -4.4% for the year. Measured in Canadian dollars (the Value Fund’s reporting currency) the S&P500 Total Return was up +3.9% for the year.
Scorecard # 23 – Fear and Courage
There is a concept in cycling that has been adopted by famed value investor Tom Russo that resonates with us – namely the capacity to suffer. There will be times when our prudent value investing approach will be out of step with the markets and we will experience the pain of looking foolish for ignoring expensive and/or poor-quality stocks. But our long-term and patient approach when things aren’t going our way serves us well when panic returns. The ability to endure short-term pain (be it psychological, emotional and/or physical) often leads to long-term rewards. Buffett has often said that temperament is more important than intelligence in investing. Fortunately we were wired a certain way that happens to be helpful in the investing arena.
Scorecard #12 – The Red Dragon and King Canute
… Plunging markets provide the environment in which the seeds of future capital gains are sown. In a declining market, we acquire more earnings power for each incremental dollar invested. Accordingly, lower prices reduce the riskiness of an investment.
Scorecard #9 – Taking Stock
… We first wrote about Home Capital in the Globe & Mail on August 8, 2012. Since then the company has done what it usually does – execute on its business plan and increase earnings per share at a steady pace.
Scorecard #8 – Unconventional Wisdom
… Cisco Systems is the world leader in the design, manufacture and sale of high-performance networking equipment for the Internet. Their products are ubiquitous and most often the industry standard. In an era of increasing usage of smartphones, tablets, and connected devices (the “Internet of Everything”) data transfer and consumption should continue to increase exponentially.
Scorecard #7 – Anchors Aweigh
… Many (most?) investors are fascinated by the daily fluctuations of the stock market. CNBC, BNN and other business news programs fill countless hours of their programming days featuring “experts” that try and give meaning to recent market moves and predict the way forward. Investors are thus conditioned to search for meaning in Mr. Market’s every twitch. It is a Pavlovian-like process.
Scorecard #5 – Birdy Num Nums
… Markets will forever continue to oscillate between the extremes of panic and greed. The common thread is that at both extremes, most people ignore valuations to their peril and become transfixed with stock price movements. It has happened for centuries and will continue to as it is simply in our nature.
Scorecard #3 – Mr. Market and The Path Less Traveled
… Another key success factor in investing is being able to come to your own conclusions based on thorough research, hard work and proper reasoning. Conventional wisdom is often but not always correct. The difference is important.