Ramblings of a Portfolio Manager

Ramblings End of Week Update

We’re sure many clients are watching the capital markets with concern. We don’t believe things are anywhere near as bad as they were in September of 2008, however, market sentiment is almost as bad. Because we focus on small caps, our portfolio has been positioned in very US-centric companies, which should not be as directly sensitive to a slowdown in Europe or Asia as would large cap, global companies.

Our philosophy has always been to sell euphoria, buy panic. Right now we have a great confluence of negative events, from the debt crisis in Europe to the Financial Regulation Bill in Congress. The result has been that the fear indicators are reaching levels not seen since 2008. Most of this, we believe, is headline risk only and we are, therefore, taking advantage of the sell-off in select areas with a focus on low P/E, quality companies with strong balance sheets, in line with our long-term investment philosophy. We continue to see improving fundamentals in the US and Asia and look at this as a normal sell-off in a cyclical bull market. We are also putting our money where our mouths are and are investing more in the fund, believing that significant opportunities for appreciation lie ahead.

We encourage any investor with questions or concerns to feel free to call us at any time.

Rick and Chris