My Day Job - Year-End 2011 Edition

Submitted by Rich Toscano on May 11, 2012 - 8:09am
My company, Pacific Capital Associates, has recently completed the third-party examination of our investment track record for 2011.  (For background on this, see my inaugural explanation of these annual performance updates).  Here it is, in chart form... you can click on the chart for more detail and loads of fun disclosures:

2011 was a tough year for us.  We were and still are invested in several areas that got whacked, including foreign stocks (which have much better valuations than US stocks, in aggregate) and gold mining stocks (which we believe are extremely undervalued).  Meanwhile, despite the 12% decline in international stock markets, the US stock market -- which we are underweight due to concerns about overvaluation and risks from our debt situation -- was one of the few asset classes to post positive returns.  And US Treasuries, on which we are strenuously bearish, were the best performing asset class for the year.  All in all, our average managed account was down 6.99% after fees while the S&P500 was up 2.11%.

So it goes for value investors, as markets can move against the fundamentals for protracted periods before finally coming around (I recently put up an interesting chart on that very topic).  Despite 2011's performance, our long term track record remains intact, with our average managed moderate growth account having returned 8.9% per year after fees (5.5% per year better than the S&P500) through year-end 2011.  Bouts of underperformance are part of the value investing game, and we feel very confident that our approach will work out in the long term, which is the time period that we care about.

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