Question-and-Answer Session
Terry Badger
Now we’ll take some of the questions that have come in during the webcast and let’s start with one for Frank. Here is a macro question. We’re clearly in a better market in the US. You’ve been in the business for quite some time and you’ve no doubt been through these before, so what’s the best way to shepherd the company and your funds through these difficult markets?
Frank E. Holmes
Bear markets are very rare in the fourth year of a presidential election cycle. 80% of the time markets are up. I think it’s even more severe that when you have a bear market in the fourth year that governments go way out of their way to do everything to protect the economy. We’re seeing that. We’re seeing the government take action to bail out Merrill Lynch in the capital market. Stocks are basically naked shorting. They’re doing everything that’s possible, now Fannie Mae, to create a support system through the economic engine. What will that do? A year from now you’ll see a huge explosion in economic activity from that. What do we do? Always have cash. [Roger Gibson], we’ve always commented on him, is to have 25% of your assets in resources, 25% in international, 25% in domestic, and 25% in safe income healthy dividend paying stocks or very safe income to be able to capture these opportunities when things go on sale. So that’s the basic thought process for us is to make sure that you’re diversified.
Terry Badger
Question here for Susan McGee. On your part of the presentation, how are the flows from the new relationships you talked about in the past, I’m assuming that’s through the intermediaries?
Susan B. McGee
We saw flows beginning to come in through some of our new relationships and then the economy began to worsen over the summer, and I think as is indicative of the mutual fund industry as a whole, flows seemed to only flow down. So we’re not seeing the flows that we had hoped for but we were not anticipating the slowdown in the economy. But these relationships are starting to come to fruition.
Terry Badger
Question for Frank. Strategically, do you manage the company as if performance fees were not there and that they are just a nice bonus if earned? Is compensation from performance fees the majority of GROW’s bonuses?
- To read the full transcript on Seeking Alpha, click here »
