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First Quarter Letter 2018

April-25-18

First Quarter Letter 2018

We are pleased to present our 2018 first quarter results. On January 22nd, we wrote the following in our 2017 year-end letter: “Such a mix of high stock valuations, rising interest rates and increasing borrowing costs doesn’t usually make for a good cocktail. We therefore expect the party to end soon with TINA (There is No Alternative), as the punch bowl is being withdrawn. Equity markets are likely to become more volatile and good returns difficult to achieve.” We admit that we were more lucky than smart in getting the timing right — just four days before a 10%+ plunge in the S&P 500 — however, the reasoning behind our analysis that stock markets were vulnerable was correct. As can be seen from our results, our large cash balances and low exposure to more volatile sectors helped us outperform in a difficult first quarter. That being said, we expect to lag if markets rebound as we continue to conserve cash.