Broker Check

March Newsletter



February 28, 2020


We Are Long-Term Investors

By now you know that fear is blanketing the globe and “panic” selling of securities has put our markets into “correction” territory.  Some observers are even predicting a recession as global supply chains have been interrupted and consumers are “staying home” out of an abundance of caution. In the process, our US markets are having their worst week in eleven years. As individual investors exit the equity markets for the safety of US Treasury notes, the interest rate yield on one-year treasuries has dropped to just above one percent.

As your investment managers, we always aim to be objective and realistic and keep to our long-term strategy of maintaining balanced equity and income portfolios within each clients’ Investment Policy Statement parameters. In the process, we continue to “Buy Low, Sell High and Diversify”. This last year you saw us “Sell High” as we reduced our Domestic Equity allocations by harvesting the significant built-up gains in that category and “Buying Low” in the beaten down income categories as investors chased the high-flying equities markets. As Warren Buffett has famously said: “Be Fearful When Others are Greedy and Be Greedy When Others are Fearful”. To that end, we see many opportunities to again own the great beaten down companies included in our Domestic Equity category and we will now be Selling High some over-bought income positions and using the proceeds to “Buy Low”.

As I illustrate to prospective clients that come to us for help when their previous strategies have not worked for them, I use my personal portfolio investment results as an example of what has worked well for us over the years. Since we began managing client investments over twenty-two years ago, we have stuck with our long-term view of investing and we have produced meaningful results (total returns from a combination of growth and income) in periods that have included the Dot-Goner years, 9/11, foreign financial crises, the global financial crisis of 2008 and 2009, the Great Recession, the SARS scare and many smaller speed bumps along the way. Without minimizing the current Coronavirus situation that is filling the nightly news with the worst-case scenarios possible, we continue to believe that our governments and health care systems will contain the virus and economies will once again return to healthy and growing historic patterns.

By way of illustration, Jeannie’s and my combined portfolios invested for our future retirement (currently invested equally between equity and income categories) have produced the following results by being fully invested over the years:

  • The 22-year period ended 2/27/20 returned total returns of 278% (or 12.6% annually, on average).
  • The 20-year period ended 2/27/20 returned total returns of 211% (or 10.6% annually, on average).
  • The 10-year period ended 2/27/20 returned 85% (or 8.5% annually, on average).
  • The 5-year period ended 2/27/20 returned 25% (or 5% annually, on average).
  • The 1-year period ended 2/27/20 returned 7%.
  • The YTD period ended 2/27/20 has returned a loss (all UN-realized) of -4.5%.
  • The last 7 trading days that have been impacted by Coronavirus fears has returned a loss (all UN-realized) of -6.6%.

(Please note that the results for my personal retirement accounts do not include management fees that our clients pay us to manage their portfolios).

Our markets are down again TODAY as the S&P 500 traded down almost one percent.

What I am attempting to illustrate is that our markets have traditionally been very resilient  to any number of sell-offs and that they have recovered and gone higher each time as the great companies we invest in and the managers we believe in have risen to the task each and every time. Only time will tell, but in the meantime, we will stick with our long-term strategies that have worked for us in the past.

Please contact either James or me if you have any questions about your individual managed accounts.


Intelligent Investment Management, LLP