As we mentioned in our last quarterly letter, the final three months of the year are typically a seasonally strong market period. Our stocks were up over 10% in the 4th quarter and more than 30% for the year, exceeding the market averages for both periods. In speaking with several clients, it is clear that their two greatest concerns are the dysfunctionality in Washington, and the sustainability of what is now an eleven-year economic expansion and bull market. Fortunately, for us, our days are spent talking to companies and listening to conference calls rather than watching news programs. We have access to company information that is quite reassuring and not negatively impacted by the political turmoil.
As to the long market advance, we would point out that over the last 10 years’ individuals have added $2.2 trillion dollars to bonds and redeemed $400 billion dollars from equities. Furthermore, the broadening of the stock market leadership in the last several weeks has been a reassuring development. Investors are indeed looking for bargains and willing to participate in unglamorous areas of the market like banking and other classic value stocks.