March 9, 2009 marked the low point of the S&P 500, when the broad market US index closed at its trough of 667. One-year has now passed and as of yesterday, the S&P 500 is up 70.6%. With all of the naysayers, doomsayers, and pessimists littering investment media over the last year, confidence has been particularly difficult to maintain. On this anniversary date, we’re quite satisfied to know that our investors stayed true to their beliefs, and despite the economic hardships, remained disciplined in our investment approach and captured the returns that the markets provided.

A year ago, the general themes of media headlines were along the lines of someone asking for billions of dollars, crimes of fraud, troubled assets, nervous investors, unstable interest rates, downgraded companies, and shaky worldwide economies. News these days have become a bit less dramatic, and with the strong returns of the last year, it is no wonder that many investors would rather turn a somewhat-relieved blind eye to the economy. Yet, while we encourage removing the noise from investment advice, we also encourage understanding the environment. In a nutshell, what this means is recognizing the randomness of returns. Neither positive nor negative returns will persist forever, and as investors we must keep in mind that returns are random. For peace of mind, our expectations must be hedged with understanding of the long-term strategy.

A year has gone by with substantial positive returns, and for that we can enjoy this anniversary.  A once in a lifetime lesson in investing, finance, and economics has been taught to us all, and for that we can be more wise.

The line between successful and unsuccessful investing can be quite thin. Given all of the same circumstances, what often determines successful investing is typically the willingness to stick to the philosophy and the ability to rise above the noise.