QRTEP - Silver Ring Value Partners Q4 2023 Letter

2024-02-16 08:00:00 ET

Summary

• Silver Ring Value Partners provides investment advisory services. The Company offers portfolio management, financial planning, and trading services. Silver Ring Value Partners serves investors in the State of Massachusetts.
• 2023 was a challenging year for Silver Ring Value Partners with respect to performance.
• While I do think some things have changed, the core tenet that prices can and do disconnect from fundamental business value in ways that can allow a thoughtful investor to generate excess returns through hard work has not.
• Ignoring the changed environment is not likely to be a successful option, for the environment is certainly more difficult to navigate than in prior decades, and thus requires not blind adherence to old rules, but thoughtful implementation of classic ideas in new ways.

Dear Partners:

Happy New Year! I hope that you are doing well. Last year was a challenging year for the partnership with respect to performance. I am not going to make any excuses or blame any external forces for these results. I accept full responsibility for my decisions and the outcome. I am writing this letter from a place of humility, because frankly there was a lot to be humble about.

Despite these humbling results, I remain highly confident that the partnership faces a bright long- term future. Humility is not the opposite of confidence - arrogance is. One of the greatest challenges in investing is to balance humility with confidence.

What gives me this confidence? I strongly believe that my investment process, which has had many years of success prior to the last couple of years, is as relevant as ever. If anything, I have improved it, and myself as the investor implementing it, from recent experience in ways that I will share with you later in this letter.

I also don't think that the markets have fundamentally changed in a way that skillfully applied value investing no longer works. The rapidly changing human psychology which drives the wild gyrations in market prices is the same as it has been for many decades. And while I do think some things have changed and require appropriate adjustments as I will elaborate shortly, the core tenet that prices can and do disconnect from fundamental business value in ways that can allow a thoughtful investor to generate excess returns through hard work has not.

Allow me to end this introduction with some thoughts on my own psychology and mental state. Faced with such challenging results, many investors would go on tilt . They would deviate from their process in one of two ways. Either, they would swing wildly for the fences trying to desperately "catch up," perhaps cynically figuring that if the last Hail Mary pass doesn't work it won't matter anyway. Or, they would become shell-shocked and fearful of taking any risk, no matter how well- considered, for fear of making a mistake....

For further details see: