Over the past 70-80 years, stocks have produced pretax "total returns" (appreciation plus dividends) of 9-10%. Bonds have returned about 5-6%. Our goal is to produce average annual rates of return on our equity accounts that exceed the long-term average normal returns on stocks.

We believe this is a realistic goal which does not require us to take the kinds of risks which would threaten permanent loss of capital.

The emphasis on "average" annual rates of return is important because the pattern of returns is never orderly. We must buy "value" when we find it, but we never know when the stock price will respond and reflect the value we think we see. Therefore, we ask that clients evaluate our performance over 3-5 year periods, since quarterly, or even annual, rates of return are not particularly meaningful. In short, we want clients to be happy, or unhappy, for the right reasons.