Thank you, Mark, and thank you all for taking time out of your busy schedules to share a day with FPA. This is an opportunity for you to gain a better insight into how your money is being managed. I urge you to challenge the respective managers and their teams of analysts with your questions. I’m sure that if any go unanswered, Mark and his team will be able to track down an answer for you. All questions are fair game so hit the teams hard and often with them!
Pardon me for getting a little bit sentimental now because a lot has changed since I joined FPA 31 years ago. From a small $1.6 billion single product firm, we have grown into a diversified $30 billion company with the greatest depth of analytical and investment management talent in its history. I am proud of the fact that we have never lost sight of our core principles. Our value-driven, independent thinking and disciplined investment culture permeates all aspects of what we do. We sincerely thank you, our partners, for the trust that you have demonstrated by investing with us. We hope and expect to be able to protect and grow your capital in the volatile markets that we anticipate will be the norm in the future.
Now on to the fun stuff!
As many of you know, and for those of you who don’t, I’ve been a harsh critic of the fiscal and monetary policies that have been deployed these past several years. Since returning from my 2010 sabbatical in 2011, I’ve been very cautious about capital deployment, as many of my successors will confirm. In light of the stock market’s astounding rise since 2009 and five years of near zero short-term rates, I’ve reassessed and challenged my basic fundamental understanding of how the financial markets operate. I’ve seen the error of my ways and I believe I’ve been reborn. To achieve this new state of understanding and peace, I’ve had to do something that no self-respecting, able-bodied and semi-sane money manager would do, though my partner’s would probably take issue with this statement. You know, don’t you? To have a manager actually say he’s WRONG!
I want you to know I’ve been wrong. Yes, wrong! Yep, I blew it! Shame on me! God that feels good. I feel so much better now. I’ve come to the realization that the only way to succeed in this new financial world is to convert. Convert to the philosophy that valuation and prudence are of little importance. The only thing that matters is to trust in, you know who? Trust in the Gods of the all-knowing and all powerful. Trust in the God of qualitative monetary forecasting and policy implementation and everlasting blather, the FED. Trust in the Gods of fiscal policy management and leadership, our members of congress and the president--paragons of fiscal rectitude. I’ve converted. My conversion feels good. I’m at peace. I’m free. Now I can run with the “Risk-On” crowd. The crowd feels good. I feel the love, the affection and the psychological support it provides. What more can I say? Ah, its crowd pleasing. At that moment, I realize I’ve just awakened from a bad dream. Not a bad dream of trusting in the Gods. Oh no! I mean THE BAD DREAM of actually being a money manager who lowers his defenses and admits to, of all people, a client, that he has made a mistake. Thank God I haven’t lost all good sense.