We were down 65% in 2008/2009. Two years later we were up nicely over our what our earlier valuations had been prior to going into the 2008/2009 decline. It truly illustrated Munger’s view of being Stoically willing to suffer a 50% decline.

I’m mentally ready for whatever Black Swan event triggers the next big decline. As has been mentioned before, I read all sorts of information (including paid research) and listen to podcasts most every day, yet may go a long time between purchasing or selling positions. Lately I’ve been researching and testing scenarios that are 180 degrees different from today’s hot stock positions involving companies holding physical assets that have historically, with enough time, repriced to their original valuation after a currency crisis and/or massive inflation era.

The prospective positions must also not be vulnerable to state supported competition or to obsolescence. Additional criteria include having a light debt load, management with some skin in the game and a demonstrated ability to reinvest in the business at relatively good ROE over the years.

There are companies fitting these requirements. Their stock valuation charts look terrible over the past ten years. In many cases a dollar invested ten years ago in many of these companies has appreciated at less than a 5% annual rate. Dividends help, but when figuring inflation into the mix, investors have not done well.

Still, these companies have been growing assets while their P/E multiples have been declining. It is the age old question for value investors as to “Will the next ten years be different for the valuations of these companies?”

Stay tuned and I welcome your insights.

Uwharrie