Dear clients and friends of Vailshire–
I hope that all is well with you, wherever in the world this memo finds you!
2018 1st Quarter Investment Highlights
Volatility has (finally) returned.
Helped in no small part by President Trump and his already infamous tariffs, the markets are soaring and swooning every week… and sometimes doing so within individual trading days. Whether a savvy negotiation tactic or not, new and increasing tariff threats are causing significant turmoil within the equity and credit markets.
In other news: cryptocurrencies, “altcoins,” and other cryptoassets were the rising and seemingly unstoppable stars of 2017. They have since crashed 50-90% in value from the their late-December highs. You may have noticed. Many latecomers who dreamed of massive and quick riches were once again painfully awoken to the fact that true and lasting wealth is built slowly, surely, diligently, and methodically.
I believe that blockchain technology is transformational and here to stay. However, the days of rapid 1,000 to 10,000% speculative gains may officially be a thing of the past. I will continue to follow this space with keen interest, and if legitimate investment opportunities arise in the blockchain application space, we may invest accordingly. Stay tuned.
The first quarter of 2018 was interesting for investors, to say the least. Vailshire Partners LP–the flagship hedge fund of Vailshire Capital Management LLC–achieved net returns of 3.54% for its investors. While not enormous, this compares to negative 1st quarter returns for the S&P 500 of -1.22% (according to Barron’s). For the fifth quarter in a row, we have outperformed our benchmark index, the S&P 500, and this time by 4.76%.
**Returns of separately managed Vailshire accounts and individual VP clients may vary based on individual investment time, preferences, and strategies.**
Our historical performance (as of March 31, 2018) is shown in the following table:
|6-Month VP Returns||8.1%|
|6-Month S&P 500 Returns||2.8%|
|12-Month VP Returns||21.6%|
|12-Month S&P 500 Returns||9.7%|
|3-Year VP Returns||15.3%|
|3-Year S&P 500 Returns||25.4%|
I am still not a fan of the eyesore that is our 3-Year under-performance of Vailshire Partners LP to the S&P 500 index, and am working harder than ever to ensure that this is remedied over the ensuing 3, 5, and 10-year periods. I trust that you will be cheering me on as well, since we are in this thing for the long-haul.
Transformative technology continues to occupy the largest portion of our portfolio at 47% of total holdings. The popular “FAANG” stocks–Facebook, Amazon, Apple, Netflix, and Alphabet (formerly Google)–have performed quite commendably over the past several years. However, we are seeing weakness in their upward trajectories for the first time in awhile, for multiple reasons that go beyond the scope of this memo. It will be interesting to see if they can remain market leaders for the remainder of the year. Personally, I am somewhat skeptical, although I still love each of their prospects over the longer-term.
Market volatility is the new norm and predictions about future stock market highs or lows remain as unknowable as ever.
Thank you again for the opportunity to serve you, your family, family office, or other investment vehicle this year and in the decades to come. I am truly honored by the trust that you have placed in me.
My ongoing goal is to delight my clients regularly via personalized service and wise, often-contrarian investment strategies. Vailshire continues to grow rapidly thanks to investors like you placing increasing trust and corresponding assets into its proven, alternative, long-term techniques. If you wish to increase your investment in Vailshire’s comprehensive portfolio management expertise, or know a friend or family member who might benefit, please let me know.