Jim,

Thanks for sharing your insights like the one above. I certainly appreciate it, and I'm positive that other board members do as well! Your willingness to share your experience and knowledge really is remarkable.

Your experience with hedging largely mirrors my (much more limited) experience with it as well. The markets generally reward risk, and when you put things in place to hedge that risk away, it seems like the hit to returns is high. And indeed it's almost a definitional thing I guess - risk-free rates are low for a reason. I've generally found that the best hedge out there is... cash (or a truly diversified strategy). A 50% hit on a 100% sized position is huge - 50%. A 50% hit on a 50% sized position is 25% (assuming that other 50% was in something safe or uncorrelated). Painful, but nothing like the 50% hit. Allocation and diversification seems to be very key, though the diversification part seems harder and harder to find these days. I digress...

Your thoughts on shooting for better multi-year returns make a lot of sense - the simple fact that it's very difficult to do (emotionally) tells me that there's something there. I know I struggle with the fact that I'm now older, and that very uncomfortable feeling of not having as many years to recover (coupled with no working income) adds to the difficulty of staying focused on multi-year returns. I need to find some new approaches to doing that! With valuations so high right now, the idea of poor 10 year forward returns is somewhat discouraging.

Thanks again,

Lee