3Q22 FV Quarterly Letter

In Q3, Fundamental Value outperformed the market significantly, up 2.5% net of fees versus -4.9% for the S&P 500. On a YTD basis, this puts the strategy up 1.0% net versus the market at -23.9%. Since inception, FV has returned 22.7% net annually, outperforming the S&P by 12.0% a year.¹

Market commentary

Forty years of the infamous “Fed put” has left a legacy of moral hazard. Investors assume their risk is limited because they believe the Fed has provided them free insurance: the Fed will always step in to bail out investors should the market decline steeply, cutting rates to juice the economy, corporate earnings and stock prices.

But the Fed put is now a Fed call: rather than a limit to how much investors can lose, there is a limit to how much they can make.

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