Forté Capital

We continue to maintain strict fundamental and valuation discipline as we look for investment candidates. We think that the companies we have identified are strong market players and will continue performing well even if the economy were to muddle along for a longer than expected time frame. This is a continuation of our previously explained theme of buying sectors in general and companies in particular that will continue to outperform irrespective of how the economy fares in the short to medium term. As stated in our previous newsletter, we continue to hold a larger allocation of cash in client accounts. This larger allocation is in line with our expectation that the markets will correct significantly over the next 2-4 months presenting us with an opportunity to be more fully invested. In the meanwhile, we will continue to put smaller amounts of cash to work in client accounts so as to opportunistically take advantage of any company specific valuation corrections. We want to remind clients of the experiences from 2000 and 2001 where valuation metrics were ignored in the quest for growth. That style of investing did not make money for most investors. We continue to believe in the importance of adhering to valuation fundamentals. This does not mean that we will doggedly sit out a sustained move up in the markets. We are striving to achieve a "margin of safety" in our equity investments. We feel this is critical given the continued uncertainty over the path the economy is taking (though it is clearer now than it was three months ago), as well as the continued likelihood of a systematic shock to the economy. We always have been, and are more so now, GARP (Growth at Reasonable Prices) managers. The one caveat that we have added to this is that we are equally desirous of preserving capital. We want to point out that, unlike the large institutional managers of mutual funds, we still hear directly from our clients on a daily basis. Most clients still want the growth that we are clearly and fully committed to ...