2020 surprised most people and many investors.
March 2021 Newsletter
Dear Clients and Friends:
2020 surprised most people and many investors. Linda Martinson, Baron Funds, lists the problems of 2020: “a deadly pandemic, economic and market volatility, complete or near-complete shutdown of many businesses, record high layoffs, the worst quarterly GDP drop in modern U.S. history followed by a stock market that ended the year in positive territory and the S&P 500 index up as high as 18.4%.”
And that is the market, taking care of business in its unique way. Ron Baron with Linda Martinson and Susan Robbins founded Baron Capital in 1982. 172 employees now manage 50 billion dollars of assets. They have earned profits from investments in Tesla, various cell phone companies by recognizing that every person would someday own his own cellular telephone, while also investing in a property and casualty (P & C”) insurance company, Arch Capital Group Ltd., purchased with analysis and confidence in the people running and organizing the companies. They report they have earned $47 billion realized and unrealized profits for clients since 1992.
We have been happy with recent gains for our clients in Baron’s real estate fund. Their quarterly reports provide interesting information about the people and the companies they invest in. Warren Buffet was quoted as explaining why he believes investing in good businesses for the long term is a better idea than trying to continuously rebalance your portfolio based upon the current news cycle.
I never tire of stock market anecdotes. Do you think the 20th Century was easier and kinder than today? As Warren Buffet said in 2019: “In the 20th century, the United States endured two world wars, and other traumatic and expensive military conflicts; the Depression, a dozen or so recessions, financial panics; oil shocks; the 1918 Spanish flu epidemic and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,407.” One hundred years and the beginning value was multiplied almost 173 times!
As Buffet says: “Never a good time to bet against America.”
We march on earning dividends and capital gains even as others believe the market is losing money! Of course, it seemingly loses money many times, misread by people who do not understand the long term and refuse to see market retreats as temporary.
A Book called Ten Global Trends Every Smart Person Should Know and many others you will find interesting, c 2020, has been praised frequently, and reminds us that the world is getting better in many respects. Our legislators must believe that as they continually add to the country’s debt. As Holman Jenkins, Jr., Wall Street Journal opinion writer observes, “Only the Federal Reserve has enough money to detach prices from underlying realities indefinitely.” The budget deficit for fiscal year 2020, which ended 9/30/2020 was $3.1 trillion while the accumulated debt is now 100% of GDP. Not the way you and I have built assets! It is a worry but hope and trends show that multiple advances can ultimately solve problems and increase our blessings.
I end this newsletter with trends from the interesting book listed above. Please remember there are over 78 trends listed and I quickly chose 4.
Trend 1: “Since 1820, the size of the world’s economy has grown more than a hundredfold. Over the past 200 years, the world population grew somewhat less than eightfold.”
Trend 2: “The latest World Bank assessment reckons that the share of the world’s inhabitants living in extreme poverty fell to 8.6 percent in 2018.”
Trend 8: “Democracy may not be expanding as fast as it once did, but neither is it in full retreat.”
Trend 10: “People today are much more likely to survive natural disasters because of increased wealth and technological progress.”
Louise Googins with Michael, Kim, Carson, Mason, and Brady