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Our investment Portfolio 100 – which is invested in 100% equities – with dividends reinvested, has returned upwards of 25% in the last twelve months. I believe the last time that happened was in the early 1990’s, and I can’t even guess when the time before that was.

My feeling is we shouldn’t be expecting equities to do that again over the next twelve months.

As we have often observed, the equity market has had an average annual pullback of about 14% since at least 1980. Therefore, I would expect some sort of hiccup along those lines most years, although it can never be timed. (You may remember that the last one was a drop of about 11%, in the first six weeks of 2016. The one before that was about 13% in the late summer of 2015.)

US Interest rates have gone back up appreciably in recent months; industrial commodity prices are trending back toward their old highs, which is usually a sign of stronger economic growth; even gold has experienced a mini-flurry since around Christmas time. Put these straws in the wind together and it may not be much longer before you start hearing the “I” word—inflation—on the six o’clock news.

Should the market take a breather just when the media start pushing an inflation narrative, be not discombobulated. No changes in your portfolio will be warranted by this; remember our principle that if your plans haven’t changed, we don’t change your portfolio.

If the noise level of the “I” word and/or the extent of any market correction start bothering you, turn off the TV. If they keep bothering you, call me, or better yet come and see me.

This, too, — whatever “this” happens to be at any given moment — shall pass.

I am happy to be proved wrong on any or all of this. Though I still won’t bet against the long term onward march of well-run global companies.

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