We have heard on occasion that THOR is not “optimistic” enough.  From an investment standpoint, whether you’re optimistic or pessimistic is irrelevant.  What is relevant is valuation – the price you pay for a security.  When managing your money, our job is to be a realist and use common sense and not be emotional.  We tend to be more optimistic when valuations are attractive.  Energy, emerging markets and business development corporations are examples of sectors that are attractively priced today.  When valuations are high, we tend to be pessimistic – like US large company stocks are today.  We have a disciplined approach to investing that is based on valuations and at times we tend to be against the “crowd’ in our thinking, sometimes during major turning points in the market.  Here are a few examples where valuations enticed us to invest in particular sector(s) when the “crowd’ was screaming just the opposite:

• In the summer of 1999, we completely eliminated our positions with technology sector exposure. We bought deep US value funds – both large and small company.  At the time, we believed valuations in technology were too expensive, while industrial, smoke stack (value) companies were selling at ridiculously low levels.
• March/April of 2009. This period was at the tail end of one of the worst stock market corrections in American history, during which stocks had fallen significantly more in value than the economy.  If you look at our market updates for the three months (April of ’09 through June of ’09) after the market trough, you will see that we were “optimistic’ on stocks, but less than confident about the economy (if you would like a copy of those updates, let us know and we will be happy to e-mail them to you).
• A couple of years back, we wrote extensively about Europe and the economic problems of the “common” currency. We received several comments that we were being too pessimistic.   We purchased a position that was short (2x) the Euro because it was overvalued versus the US dollar.  We used our bi-weekly market update to explain why we were optimistic on the US dollar versus the Euro, given its relative valuation.  We reduced the position in 2015 and sold the remaining portion of that position in late January 2016 deploying the proceeds into MLPs – gas and oil pipelines – that were yielding 12%+ at the time and are much more attractive on a valuation basis.

Days of Wonder Stock Market Game – follow-up

A few months back, we mentioned how we were sponsoring the Days of Wonder School in the Cincinnati Enquirer Stock Market Game.  The Days of Wonder School is a school that was created 3 years ago as an alternative to public schools where students were being bullied or left behind.  THOR worked with 14 teams consisting of over 60 students.  The school competed against other local schools that had more resources than they did.  One team, “The Dogs”, ended up in 3^rd place, achieving a gain of 30% over a ten week period.  Below is a picture of The Dogs along with our team.

We also want to thank Ray and Gary for donating computers to the school.  At a time when it seems like everyone is connected, this school is a beacon for many that come from families that don’t have technology resources at home.  On occasion, we would suggest the students complete their trading at home.  In every group where this suggestion was made, there was at least one child who mentioned their family didn’t own a computer.  These donations mean more than Ray and Gary will ever know.  Thank you!