For all the ongoing market concerns, the 3rd quarter ended with higher asset values. At the start of the year, we felt strongly that the economy was not going to slide into a recession and the FOMC would not raise rates four times. The economy and the Fed Funds rate remained stable, but it has not been a smooth ride. The market anticipated that the FOMC would increase short term interest rates, only for the hike to be delayed time and time again. Frustration with Washington has been accelerating. S&P earnings were in a recession, falling two consecutive quarters, largely driven by lower oil prices. Typically an indicator of economic prospects, the 10 Year US Government yield hit an all-time low of 1.36% in July. Yet weeks later, the S&P 500 climbed to an all-time high of 2,193 and credit spreads painted a healthy picture of the US economy. We can take many lessons from this quarter, but most important is that buying quality assets when they are at attractive prices and having the patience to see them through can be financially rewarding.
Read our full Q3 2016 Investor Letter