Blog - April 2012 Market Letter

Jeff Cedarholm
Chief Investment Officer

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“Wisdom consists of the anticipation of consequences.”

– Norman Cousins

You know, having a corporate website leaves you with the obligation of having to keep it updated.  In our office over a year ago, we discussed this updating task and Mitch Marsden volunteered to develop a blog to fill some of the gaps.  Never having been one to look a gift horse in the mouth, the rest of us breathed a collective sigh of relief that we didn’t have to shoulder this entire burden ourselves.  Mitch really has done a good job putting it together and assigning us to come up with articles, or in my case, the quarterly market letter that I have now written for over ten years.  I have always felt free to discuss whatever was on my mind and usually relate that to current market conditions.

Little did Mitch know that I would feel free enough to discuss chicken, free range chicken.  Back in the summer of 2010, Steve Romick, the long-time manager to the FPA Crescent Fund, used this description to discuss his style of investing: “free range,” because his mandate states he is not constrained, but can invest in almost anything, and “chicken,” because he doesn’t like to lose money. His strategy has worked well over time, producing an 8.51% annualized return over the past 10 years, with much lower volatility than the S&P 500.  The fund’s statistics are important, but not nearly as important as the diversity it offers to our portfolios.  With the developed world’s huge government debt burdens, the continued Eurozone crisis and next year’s anticipated increase in both income and estate taxes, there is a good chance we may see fear and increased volatility return to the markets by late spring or early summer.

While global economies are still relatively weak, stock markets around the world have rallied strongly over the last six months on continued central bank support (especially the European Central Bank) and the prospects of stronger economic growth, at least in the near- and mid-term.  While we are still bullish, as BCA Research has recently written, we also believe “the path to higher prices will be much rougher than before.”

Since last November, Longview has steadily increased equity positions, but we also understand that in a risk on / risk off market, you take asset growth where and when you can.  In embracing Steve Romick’s opportunistic philosophy running the FPA Crescent Fund, we are again asking our investment managers to help us with our “grow and protect” strategy.  So, we are now officially adding chickens to our herd of bulls and bears.

As always, thank you for your continued confidence in our investing abilities.

Best regards,

Jeff Cedarholm


Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Longview Financial Advisors, Inc.), or any non-investment related content, made reference to directly or indirectly in this newsletter or post will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter or post serves as the receipt of, or as a substitute for, personalized investment advice from Longview Financial Advisors, Inc.. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Longview Financial Advisors, Inc. is neither a law firm nor a certified public accounting firm and no portion of the newsletter or post content should be construed as legal or accounting advice. A copy of the Longview Financial Advisors, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

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