Monthly Message

The Wutherich & Co. Composite was up 0.3% in August. This compares with the S&P/TSX up 0.7%, the BMO Small Cap Index up 0.1%, S&P 500 (US$) up 0.3%, the DJIA (US$) up 0.7%, while the NASDAQ (US$) was up 1.3%.

A positive return in the month of August! Though it is a small one, we’ll take it. The weak returns this year bewilder us. At times like this, we always go back to the fundamentals. All of our companies reported quarterly results in the last several weeks. 12 of our 15 names had good or very good numbers with strong outlooks while the other three were neutral to mildly negative. The fundamentals of most of the stocks in our portfolio are very healthy, though there are always one or two exceptions. When we see a disconnect like this between the fundamentals and stock prices, we get more confident in the long-term potential returns of the portfolio. JF and I have substantially all of our invested net worth in this portfolio and so, just like you, our preference for returns is for sooner rather than later. But, as we always remind our clients, the one thing that we don’t know is when these returns will be realized. The longer it takes, it is like a spring being slowly compressed. At one point or another, the spring’s energy will be released.

In the meantime, we have made no changes to our investment approach and continue to focus on what we believe to be good quality, growing companies that we think are trading at reasonable valuations.

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