We have no crystal ball. We cannot predict the future.
These statements are a critical part of our investment philosophy. We recognize and accept that we cannot predict the future direction of the financial markets. If Warren Buffet is not smart enough to predict the future, we certainly cannot.
We do have a very clear investment strategy. We adhere to a disciplined investment approach, for both stocks and fixed income investing. Our philosophy is not based on guessing which country (will Japan or Europe be hot in 2011?), stock sector or company to invest in (should we buy Citigroup and sell Microsoft?). That is not a winning game.
We do know that interest rates are at or near historical lows and that eventually interest rates will rise. We know that when interest rates rise, owners of bond funds will face financial losses, which for some will be significant.
If you own bond funds, or know someone that does, they should talk to us. We do predict that discussion will be a very valuable one.