Trying to predict and successfully time when the next storm will arrive is not a substitute for sturdy construction. Financial storms tend to arrive with little warning. The key to resilience is to know that they will inevitably come and to prepare in advance.
During the quarter we initiated a position in TVA Group (TSX:TVA.B). Based in Quebec, the company is a leading broadcaster and owner of specialty channels targeting the French-Canadian audience.
…when we see foolishness all around us, we remind ourselves that we are investors. Not speculators, investors. Value will once again have its day. It always does.
“As Mark Twain so aptly put it, history doesn’t repeat itself, but it often rhymes. The current market environment — especially in certain tech stocks — reminds us a little of the late ‘90s stock market.
COVID-19 pulled a bear market out of hibernation and humanity took its place.
“This past year was our eighth consecutive year of positive returns. Our two biggest contributors to the portfolio in 2019 were our investments in Apple +58.8% (AAPL) and Facebook +56.6% (FB), both of which were purchased during the Q4 2018 selloff. Just a few meaningful and timely decisions can make a big difference to portfolio returns.”
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.
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.