|
|
|
|
Sometimes, numbers can speak more loudly than words. In the first quarter of 2000, we made the decision to move all of our clients’ portfolios out of equities and to safeguard their hard-earned assets into cash equivalents. Over the ensuing years, we have advised our clients about the deterioration in various segments of the economy, and have erred on the side of conservatism with regard to the volatility inherent in many investments. It has been a very long, arduous, and at times frustrating eight years of vigilance. But look what has transpired! From January 1, 2000, through June 30, 2008, the cumulative, total return for investors who maintained full exposure to the S&P 500 Index is barely 1%. Keep in mind that is a total figure, not annualized, and should be adjusted for risk assumptions and associated fees. In comparison, for those clients who have heeded our advice during that same period, their cumulative return now exceeds +36%. Nearer term, the figures are just as compelling: for the past twelve months, the return on the S&P 500 is –13.1% while our return is +4.3%. We believe that the equity markets have not fully capitulated, and based upon both macroeconomic and financial analyses, we believe that there is further downside risk for many investors. We must emphasize that within our longstanding discipline, the factors which fomented our decision to sell out of equities in the first place are the same factors which will determine when we will buy into equities again. The strategy to “buy low and sell high” is based solidly upon an assessment of the global economy, on turns in cyclical industrial sectors, and upon the scrutiny of individual companies. At this moment, many factors are coming together, on the one hand indicating that the sell off has not finished, and on the other hand, signaling opportunities to buy fundamentally sound companies in advantageous industries which ought to thrive in the upcoming economic cycle. It is not a question of “if” this will happen, just a question of “when”. Yes, there will be days and even weeks during which the equity markets may feign a recovery. However, not all stocks fall at the same time and to the same degree, so there are ample opportunities to wisely pick and to prudently choose investments using our established disciplines. In the meantime, our clients are safeguarded in positive yielding Treasury notes, and we are steadfast in our commitment to preserve capital, manage against downside risk, and garner real and absolute returns.
George A. Leylegian |
|
|
|
|
|
© 2008 Leylegian Investment Management, Inc.
/ Web Site Privacy Policy
|
