Notes on Q3, 2011

“Hope is not a strategy.”

The third quarter of 2011 has been very difficult. From the middle of July the markets sent signals that the economy was going into another recession, signaling a bear market for our investments (please see our market newsletter on our website for details). We responded by selling several investments that we had only bought 45 days previously. Our goal in July was to capture some upside potential we saw in the market. Six weeks later, we saw several market indicators show us that the world was not following a growth script and the macroeconomic view turned decidedly negative. By selling we took a larger than average hit in the value of our portfolios, but the amount of risk taken out of the investment portfolios was reduced dramatically.