April – June 2008

July 29, 2008

If we are in a bear market, as I think we are, then the bottom will be marked not by the absence of good news, but rather by an increasing supply of good news ignored by the market. Currently I believe we will have an increasing supply of bad news which may not yet have been factored into valuations at the index level. The bear market bottom seems some time away.

We continue to focus however, not on the market and its movements, but on company performances and their valuations. I believe we have a defensive portfolio and will use the high levels of cash at appropriate levels. Should the market decline further, I believe we will lose a lot less - the least bad option, given that we are invested to some extent.