Many of these events we “forecasted” have in fact come to pass. Importantly, we encouraged fellow investors to change their thinking and anticipate and expect such negative events. In our investment strategy this year, the portfolio has managed to sell fully valued positions during the positive months and hold cash to reinvest and capitalize during negative months. This strategy has worked well in 2011 as the portfolio risk was mitigated by adding lower risk investments after selling more cyclical firms. We are never pleased to see the value of our investments decline as we are personally investing money alongside our shareholders. Our thinking is to prepare for such normal market fluctuations even though high downside volatility never quite seems normal emotionally. Statistically speaking, 2011 has seen 3 down months and three up months to June, followed by declines in July and August to date. Reflecting back to the disastrous March earthquake in Japan, the events proved both impactful and emotional, as the world reached out to help a nation in turmoil. Although markets fell in sympathy with the Japanese plight, the ensuing four months saw a strong market recovery. Other events today or tomorrow could follow a similar pattern. The Polaris June investment screens showed a near record number of companies at great values. We have a steady hand on the investment strategy and encourage fellow investors to use these sporadic downturns to occasionally add to investments at low prices. These are our kind of markets, where volatility and subsequent irrational market behavior present excellent investment opportunities.


2010 Foreign Tax Credit