If you’ve been reading this newsletter, you know we have been calling for the end of the world for awhile. Apparently, it came in June. Lehman, FannieMae and FreddieMac were all rumored to be going under, oil was making new highs near $150, and the dollar was continuing its plunge.

It was a period of great unrest, some would even say crisis.

Long Term Investor? Prove it!

Second quarter was a period which tested our resolve as long term investors. Our conviction to long term investing, a strategy which says buy well and stay the course, was severely tested in Q2. We believe in what we’re doing and we continue to be opportunistic looking for aggressive values during some crazy times.

Say “Uncle”

2008 came in like a bear and, thus far, has overstayed its welcome. And all but the most optimistic “permabulls” still see some more pain before we emerge from this one. We believe that there will be more major writeoffs in the financials as bad credit and mispriced risk continue to come off of balance sheets.

Has the market “capitulated” yet? Hard to say, but there are few investors still calling for the return to bull status. Fewer are calling the end of downturn. We seem closer to the bottom than we have for awhile.

Opportunities to Invest

For long term purposes, this is our kind of market. We are always on the hunt for high quality and yield rich companies at excellent valuations.

Markets like these favor a flexible approach to valuation, growth and value alike, a fundamental research based methodology and a long-term time horizon.

The Income and Growth Fund

You, our investors, asked for an investment vehicle that provided reliable yield while offering some protection from inflation. The Wanger Income and Growth Fund is open for business under the skillful hand of portfolio manager Bill Andersen. If you’re an accredited investor and wish to learn more about Bills’s thinking regarding current income and inflation protection, please contact us.

Keep the Faith. Keep on Working.

There is no shortage of things to be worried about. But ultimately, valuations are down and yields are up. Our job is to find those opportunities for you, our partners.

Yours,
Eric Wanger, JD, CFA