In the Context of Global Financial Markets of the Past Several Years, 2011 Reinforces Attributes We Believe are Critical to Successful Investors

While 2008 is etched in many investors’ minds, 2011 was also a very difficult year, although on the surface it looks relatively unremarkable. The Dow Jones Industrial Average was up 6 percent, and the broader, more representative S&P 500 was basically flat (both quoted on a price basis). Although the S&P 500 stood at 1257.64 on the last trading day of 2010 and 1257.60 exactly one year later, 2011 was a year full of crises that sapped investor confidence. Still, the markets showed tremendous resiliency in the face of numerous challenges: European debt crisis, debt ceiling debate, Japanese tsunami, Arab Awakening.  More importantly, despite tepid returns, domestic equity valuations improved as earnings increased, bond yields provided little competition for risk capital, and the economic data showed improvement.