2022 Q3 Newsletter
“The intelligent investor is a realist who sells to optimists and buys from pessimists.”
Benjamin Graham
After posting a strong recovery off the June lows this summer, major market indices have reversed course this fall to establish new lows in what is now the 18th Bear Market since the end of World War II. While the media expends time and energy blaming market conditions on inflation, the ongoing war in Ukraine, higher interest rates, the upcoming midterm elections, etc., we Spartans recognize the current unpleasantness for what it is: an inevitable but temporary interruption in the permanent advance of equities. While these episodes are never fun, we take comfort in knowing:
- Historically, bear markets occur once every five years.
- Every one of the 17 prior declines ushered in an advance that dwarfed the decline in both magnitude and duration.
- We accumulators have a delightful opportunity to greedily gobble up additional shares of our most beaten-down positions at valuations not seen in years.
- We have set aside more than enough cash and/or short-term, high-quality bonds to fund our recurring distributions through at least the end of next year.
- While high-flying Growth stocks have given back much of the outsized gains they amassed since the onset of the pandemic, our Value stocks have quietly held up remarkably well.
- We will not panic, so we will not sell, so we will not turn perfectly normal, temporary fluctuations into permanent losses. After all, Panic is Forbidden at DEM.
- Optimism is the only viewpoint that squares with the historical record: This too shall pass.
On the administrative front:
- Please accept our heartfelt thoughts and prayers for all of our Spartan friends and family impacted by Hurricane Ian.
- The transition of our accounts from TD Ameritrade to Schwab’s advisory platform is underway. Although you may not notice any changes until the second half of 2023, rest assured we are working diligently behind the scenes to ensure this transition is completely seamless for you. We will keep you posted on the progression.
- Please ask your CPAs to run your 2022 tax projections after they wrap up the 2021 tax filing season October 15. This gives us plenty of time to design and implement tax-saving strategies for you prior to year-end.
- We are proud to announce that our friends at Dimensional Fund Advisors have been named 2022’s Asset Manager of the Year by RIA Intel. Like us, they share our passion for delivering a successful investment experience through logic, science, and discipline.
- Many thanks to our Atlanta area clients who recently joined us for our DEM Family Picnic in Alpharetta, Georgia. After two years of mostly virtual contact, it was wonderful to see so many of you face-to face again.
- Please look for a “Save the Date” announcement for DEM’s 25th anniversary celebration which will take place on Friday, June 23, 2023. To commemorate this milestone, we will celebrate the night Jimmy Buffett–style at the Margaritaville Resort in Jacksonville Beach, Florida, with food, drinks, entertainment, and a very special keynote address. Trust me, you will not want to miss this!
It continues to be both an honor and a privilege to serve as your family’s trusted advisor.
Don Davey
Senior Portfolio Manager
Disciplined Equity Management
Plan Appropriately, Invest Intelligently, Diversify Broadly, Ignore the Noise
