Composite Returns of Losch Management Company

In February of 2012 Losch Management Company's performance results were audited to assure conformance to the Global Investment Performance Standards. The standards were establish by the CFA institute to establish global standards for calculating and presenting investment performance.

The Link below is to the information from Losch Management Company's GIPS presentation in table form and results are compared to the returns of the Standard and Poor's 500 and the NASDAQ Composite averages. All the data were computed by my, as investment manager, portfolio software which is Portfolio Center from Performance Technologies. The results are computed from trade and price data that was downloaded from customer accounts at Charles Schwab for the period from December 31, 1995 to October 2003, and from Ameritrade from October 2003 to date.

The main value of the tables is not their predictive value (they have none), but in the way that they demonstrate the value of a few percentage points of out-performance. The table shows that a 4% difference in the performance over 16 years make a huge difference in the end result. You can see the table below at the page.

Results of individual accounts will vary to some extent from this composite because all accounts do not hold the same stocks. The main reason for the different positions in different accounts is that the accounts are opened at different times and money is added to the accounts or withdrawn from the accounts according to the needs of the individual customer. The value of a investment manager should be measured by the value added by the manager.

When a new account is opened, stocks are purchased for that account based on the market valuations that exist when the account is opened and depending upon the investment needs of that customer. Stocks that were attractive for purchase when one account is opened may no longer be appropriately priced when the next account is opened.

As long-term positions become priced above their intrinsic value, accounts with a small gain in the stock will sometimes be sold earlier than a position that has a large gain. Some long-term positions have very low cost basis and are mostly capital gains. Losch Management Company is reluctant to sell these positions because the sale triggers a large tax liability, and we will sell only if the over valuation becomes extreme.

Past results are no guarantee of future performance. It is certainly Losch Management Company's hope that we will be able to outperform the market in the future, as in the past. But there is no guarantee that our results for the next Twenty one years will match the returns for the last twenty one.

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