I’d like to add a few comments regarding the virus fears, and a reminder with respect to how I’ve managed your portfolio, over these many years. For those of you who are newer to working with me, this will help frame the bigger (and longer) picture.

1. As you know well, I have always recommended the “take profit as we go approach”, rather than indiscriminately offloading companies when headlines get the better of us. This strategy has functioned beautifully and helped us avoid selling into down markets. This method worked effectively throughout late 2008 and into 2009 and most recently, I can cite your calm demeanor during the last quarter of 2018, where we saw a temporary drop of 10% in many cases.
2. With the stock markets up an astounding average of 20%+ last year, I believe we can weather through this turbulence. Many of you have heard me say that I aim for an annual return between 4% to 5%, over the longer-term. We have built up a lot of cushion for this and have exceeded these targets.
3. The media has been fanning the flames with bright red headlines and throwing around words that would have us all believe the world is coming to an end.
4. From what I’ve gleaned through various sources, a typical flu season lasts 3 months - December to February. In the US alone, approximately 45 million people catch the flu, over 700,000 become hospitalized and more than 62,000 (in a typical season) die from complications due to that illness. The possibility of a pandemic (we saw it with SARS), feeds into the most basic fear in all of us and can fuel irrational and emotional behaviour.
5. When we witness these big sell-offs, money does tend to flock to essential services and infrastructure, telecom companies, utilities, real estate, healthcare. As you know, you are already heavily allocated to these sectors.
6. With the exception of a few of you, we are sitting on more cash than usual because I felt the market (since the last quarter of 2019) was overheated. This means we have some excellent opportunities in the coming months to pick up some big quality names at significant discounts.

Please do not hesitate to call or email if you are feeling at all uncomfortable with riding out the storm. We are here for you and want to assure you that your portfolio is in good hands.

Libby

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