The big news of the day is that Mario Draghi threw everything plus the kitchen sink at the European economy today. Markets started to rally but faded off when he had the effrontery to suggest that the may not lower rates again in the future. Mr. Draghi said that “Rates will stay low, very low, for a long period of time and well past the horizon of our purchases. From today's perspective and taking into account the support of our measures to growth and inflation, we don't anticipate that it will be necessary to reduce rates further." They lowered rates further into negative territory, expanded asset purchases to include corporate bonds and increased repurchase form $60 billion to $80 billion Euros a month but the market apparently wants to know that more is a possibility. I doubt this will do much for the Eurozone economy but it should be good for European assets, especially banks, and we own a bunch of those in the International Value Portfolio.

The election here in the US continues to just be a horrifying show of unqualified candidates saying ridiculously stupid things. Marco Rubio has said he feels bad about the last debate telling Fox news “"My kids were embarrassed by it. My wife didn’t like it. I don’t think it reflects good. That’s not who I am. That’s not what my campaign is going to be about or will ever be about again. I’d do it differently – on the personal stuff. I’m not telling you he didn’t deserve it, but that’s not who I am and that’s not what I want to be.” Hopefully this means we do not have to hear further discussion about candidate’s anatomy in tonights debate unless John Kasich drops his trousers to get the moderators attention. I do expect to see the continued yapping poodle attack Trump strategy adopted by Ted Cruz and Marco to continue tonight adding very little real debate or discourse to the national discussion. On the other side Clinton and Sanders are in a race to see who can raise taxes at the fastest rate. All I can say is play close attention to your local race this year folks because Congressional and Senate races will be very important. Any of these potential President will be needing a whole bunch of checks and balances.

There is still just not a lot to do in the markets right now. We picked up a few new positions during the recent late unpleasantness but prices have rebounded nicely and we are once again just 5% below all-time highs. My screens are back to showing very few new bargains. The only cheap stocks I can uncover I already own or have passed on for one reason or another. Value has perked up a bit but it is still a tough market in which to get money to work outside the community bank space. I am seeing earnings disappointments create an opportunity to increase my stake in some of my favorite special situations but we are not awash in buying opportunities by any stretch of the imagination.

There is a time to be very busy in the stock market. Those times look a lot like 2002 nd 2008. The do not look like today with stocks flirting with all-time highs and trading at 21 times earnings. Much has been made of the fact that the Russell 200 has fared much worse than the S&P 500. While this is true the drop so far is more a case of the index becoming less expensive than one of the index being cheap enough to represent a bargain. Ex money losing companies the Russell 200 trades at 19 times earnings which is hardly cheap.

It can be very frustrating to do nothing for long periods of time but that is exactly what is required for success as a long term investor. You have to think like a private equity investor and not like a trader. There is a reason that private equity is consistently among the highest performing asset class. Attention to price and time are the investor’s best friends. If you pay a low enough price and give an investment a long enough time- think years not months- then your odds of long success are greatly increased.

Times like this are why we have baseball and books.

Have a great week

Tim

Markets like this are a great time to take a drive down

https://www.youtube.com/watch?v=y5w2iCvTfq8