Clients of the Firm,

As celestial bodies move past each other in the mysterious dance that is our solar system, we wanted to take a moment to offer thanks to our clients and partners.  

Yesterday marked the 20th anniversary of Wernau Asset Management’s founding as an independent firm.  Let me begin by thanking you all for your incredible partnership with us over these past two decades.  No company exists, let alone thrives, without its clients and their confidence and support.  We thank you and appreciate you.

Over these twenty years, we have witnessed bubbles, crashes, crises, bull and bear markets.  A non-exhaustive list includes: the recovery from 9/11 and the Iraq and Afghanistan invasions, the 2004-2007 housing bubble, major bank failures, TARP, the great financial crisis, the flash crash, zero interest rates, the European sovereign debt crisis, the COVID-19 crash and pandemic, the recoveries from both the GFC and COVID and the significant correction in bond prices and stock bull market (ongoing). 

These two decades have certainly been marked by turbulence and a feeling that constant vigilance to money matters was a prudent course.  Yet, the S&P 500 advanced as it usually has over such timeframes exceeding inflation and outperforming bonds of similar duration. 

We sought opportunity amidst the storms and tried to avoid overpaying for assets in overly bullish markets and to avoid selling into overly pessimistic ones.  Our approach evolved over time as markets grew faster and distressed assets became less available.  A small subset of technology companies enjoyed tremendous growth and hedging became more viable in a low interest rate “winner take all” world. 

Our forward lens remains much the same as our past approach to money management albeit informed by the experience of history as an obvious accoutrement.  For investors, price still matters over long time horizons.  What you pay for something and what you sell it for should remain central to buy/sell decision making.  In short, a rational framework for investing still matters.

Markets will go up and down, reacting and overreacting to the fears and opportunities of the day.  Rational investors will seek appropriate prices to invest their capital under such conditions.  We should not be afraid to hold low risk assets if prices are too high or to buy risk assets if they are too low.  Once invested, we should act like owners of the companies we invest in.  We should hold them accountable for decision making and be patient with strategic shifts and transient market vacillations.  These investor behaviors should lead to good outcomes over time. 

The market’s forward path is uncertain as it has been every day since we opened this business.  Future success lies in continuing our patient analytical approach that removes emotional constraints from decision making and uses the voting machine that is the market as tool to take advantage of. 

The past twenty years have shown me that patience and price are the two biggest factors in investing success.  Benjamin Franklin once said, “He that can have patience can have what he will”.    Michelangelo agreed writing, “Genius is eternal patience”.   

As for price, we will strive to continue to follow Warren Buffet’s sagely advice, “Price is what you pay.  Value is what you get.”  Fortunately, earnings estimates allow us to form a rational opinion on the price of an investment and we don’t have to battle emotional entanglements with this endeavor.

As always, a transparent view of our strategy is of utmost importance to our clients and a value we strongly share.  We hope the next decades of partnership continue to be fruitful for you and we forge ahead confident they will no doubt be interesting and intellectually rewarding for us as a money management team.  Again, thank you for making this achievement possible.  We look forward to a bright future together.

 Sincerely,

Peter C. Wernau

President, CEO

Wernau Asset Management

http://www.wernauassetmanagement.com/

 Office: 617.871.0029

Important Legal Disclosure 

This letter contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this newsletter will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. Wernau Asset Management, Inc. ("Wernau Asset Management) is a registered investment adviser with its principal place of business in the Commonwealth of Massachusetts. Wernau Asset Management and its representatives are in compliance with the current registration requirements imposed upon registered investment advisers by those states in which Wernau Asset Management maintains clients. Wernau Asset Management may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. This letter is limited to the dissemination of general information pertaining to its investment advisory services. Any subsequent, direct communication by Wernau Asset Management with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of Wernau Asset Management, please contact Wernau Asset Management or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). For additional information about Wernau Asset Management, including fees and services, send for our disclosure statement as set forth on Form ADV from Wernau Asset Management using the contact information herein. Please read the disclosure statement carefully before you invest or send money.