Welcome to the next decade. Investors were tested to extremes this past decade; yet, wherever there is crisis, you can be sure there is opportunity close by. So as we all collectively stared into the abyss a year and half ago and our discipline was tested, we chose to focus and trust our independent analysis on the opportunities that were presenting themselves in 2008. The end result was a truly outstanding year for our Van Arbor Funds.

The Canadian Fund led the pack in 2009, doubling in value and more importantly outperforming the TSX Index by nearly 70%. The World Fund also stood out with its 43% return, beating the World benchmark index by nearly 35%. There is no doubt that 2009 offered better opportunities than most years; however, we like to look at the full two year cycle to gauge our performance over the down and up market.

The more important statistic we like to look at is the performance of the Funds since the  TSX  peaked in the summer of 2008. Since then, the  TSX remains 20% below its peak value, yet both the Van Arbor Canadian and World Fund have increased in value by nearly  40%  since  the  TSX peak. We are proud of that statistic because it exemplifies our focus on capital preservation alongside capital appreciation.
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Ever since the middle of September, even though it may not feel like it, the TSX Index has been trading in a flat range. Markets are essentially digesting this year’s big gains. Van Arbor has had a nice feast on material, energy, and cyclical companies for most of the year, but as of late we have been repositioning into companies with better current risk/reward prospects.

More recently we have been snacking on food stocks (pardon the pun) as well as high yielding telecom & utility stocks. These have been doing great relative to the market and should benefit from earnings momentum and developing macro trends. See the charts below to get an idea of why this is a stock picker’s market.

So with markets digesting, that begs the question: when is the next big meal? As opposed to business which is about creating opportunities; investing is all about spotting the best opportunities before everyone else. Usually 90% of a good trade is planning, while 10% is executing it.
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