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Investments Inc.

Annual Returns

President’s Portfolio
2020 11.7%
2019 15.5%
2018 –11.9%
2017 9.3%
2016 19.8%
2015 13.9%
2014 23.9%
2013 49.4%
2012 30.4%
2011 14.4%
2010 29.0%
2009 47.4%
2008 –36.8%
2007 –15.5%
2006 9.1%
2005 24.3%
2004 6.0%
2003 68.4%
2002 47.3%
2001 64.8%
2000 –17.4%
1999 9.2%
1998 0.5%
1997 53.2%
1996 37.4%
1995 13.2%
1994 1.5%
1993 77.8%
1992 50.1%
Vice-President’s Portfolio
2020 3.5%
2019 14.5%
2018 –1.5%
2017 11.6%
2016 11.0%
2015 2.5%
2014 14.0%
2013 15.3%
2012 12.7%
2011 –2.7%

A question that is often asked is, “Why do your returns vary so much from year to year?”

Our reason is that the portfolio is relatively small. Generally, the fewer the number of stocks in a portfolio, the more susceptible it is to price volatility. Fortunately, even with the raging ups and downs of the general market, the President’s Portfolio has been hit by negative returns only four times since 1990. This is a record of which we are extremely proud.

Our experience is that the valuation cycle — from an undervalued, out-of-favour stock at the time of purchase, through the period of recovery to full value and our sale — is irregular. Quite often, the market is slow to recognize the improvements in a company’s fundamentals — but when sentiment shifts, it often does so dramatically, as institutions and brokers gravitate towards strong performers and propel them even higher.

For this reason, turnaround situations often more closely resemble the so-called “J-curve” of successful venture capital funds, than the more linear progression of their big-cap, “growth” brethren.

It stands to reason that, at any point in time, the companies in our portfolio will be at different points in this valuation cycle. When it happens that a large proportion of these stocks are toward the end of this process and are appreciating rapidly, we end up with another of those banner years.

This natural variability is amplified by the effect of takeovers. Often these occur at substantial premiums, and they are responsible for some of our best profits.

Finally, a year is a very short time frame. Over the long term, things tend to balance themselves out. That is why 10- and 20-year numbers are so important: the longer the term, the more merit you’ll find in the results. And our long-term figures certainly speak for themselves!

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