Sather Financial

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Sather Financial Group

120 E Constitution St
Victoria, TX 77901

(361) 570-1800


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End of Year 2005 Comments

Instead of rehashing every twist and turn of the financial markets in 2005 we are going to take a slightly different angle as we close out the year.

In a nutshell the stock markets produced low single digit returns, as have the bond markets. While it beat huge losses, it was still a year to forget. Inflation took a bigger bite out of our purchasing power and fixed income assets have not provided us with a safe haven.

With this short recap in mind, we have noticed a recurring theme in conversations with clients regarding their investments, and the financial markets in general. Since several clients have these questions we think many others have similar questions. As such, we wanted to provide you with the following, as well as the attached document, in an attempt to address these issues.

For the last two years we would give ourselves a sub-par grade in terms of investment performance relative to the broad stock markets. Although we have generally performed in-line with the markets, we do not strive to be merely “average”.

Part of the issue lies in our desire to find and exploit large investment valuation disparities. While we have found many companies that appear to have substantial value, the markets have not yet recognized this value. Over the short run, this has obviously held us back. Over the long term, however, our philosophy and discipline have continued to work. Viewed in the context of long time periods we give our investment structure and philosophy a passing grade.

We do not chase investment fads. Most oil and gas companies have greater investment fundamentals than did the internet companies of a few years ago. However, we are still hesitant to chase after the hot stock of the day.

In 1999 we had a similar stock market. We had rising interest rates and a stock market that was dominated by not only one sector, but just a handful of companies. At the time, we frequently discussed the fact that these companies would stumble—and we were viewed as the red-headed stepchild who was missing the party.

The last two years have been quite similar. If you were not in energy you missed the party. And while speculating on $100 oil may be the latest water cooler discussion it does not make for an appropriate investment discipline. Short term, we have not chased after these quick gains and our clients have suffered. More importantly, though, our long term clients continue to benefit from our disciplined approach.

To help further explain our position we have attached a document that we refer to as our “Investing Principles & Instruction Manual”. It is something we provide to new clients and as such wanted to provide it to our existed clientele. We hope you will take time to read it over and call with questions on this or anything else.

Also, should anyone like to read our recent SEC Form ADV please let us know and we will make it available.

Finally, thank you for the opportunity to work for you this year—it is truly appreciated. Furthermore, we wish everyone a safe and prosperous 2006.


Dave Sather, President


Last Updated on Friday, 06 March 2009 13:57