Hello Partners,
The year 2022 was a difficult year for investors. The general market was driven down by investor fear of a US recession plus uncertainty regarding high inflation with corresponding rising rates by the US Federal Reserve Bank (the Fed) and a war in Ukraine. Many technology stocks dropped to a more normalized valuation based on historical norms. The following is a list of the returns for several different market benchmarks for the year illustrating that few strategies returned positive results in the year:
The three year run of 30%+ returns for our partnership ended in 2022 with a negative return of -27.7%. Our partnership is weighted toward technology which served us well for the past three years. In 2022 this weight was a key cause of the worst year of returns since inception. Partnership returns missed both absolute and relative goals for the calendar year with negative absolute returns plus returns that fell below that of the returns of our benchmark fund, VFINX.
Although 2022 was not a "normal year" in terms of the events that occurred, we look at these types of events that trigger negative sentiment as normal. There is no perpetual growth machine. Good business must weather ups and down in business cycles. We believe we own good to great businesses. We are assessing whether to move to better opportunities but we are taking no money out or sitting in large cash positions. We believe times like these are when patient, disciplined investors are presented with opportunities. We plan to stay fulling invested in current or possibly some new positions. We encourage partners to assess their long term returns vs. the long term returns of our partnership. We have a number of ideas with which to put new month to work should be have additional capital added by partners..
The following table are annual returns of the partnership (RACP) vs those reported for the Vanguard 500 Index (VFINX). Outperformance years are highlighted green.
| Year |
VFINX |
RACP |
| 2014 |
13.51% |
8.7% |
| 2015 |
1.25% |
0.2% |
| 2016 |
11.82% |
13.5% |
| 2017 |
21.67% |
24.5% |
| 2018 |
-4.52% |
-14% |
| 2019 |
31.33% |
35.6% |
| 2020 |
18.25% |
30.1% |
| 2021 |
28.53% |
34.6% |
| 2022 |
-18.23% |
-27.7% |
Attached are a list of 2022 Year End Reports for your reference:
- Total Partnership Valuation at year end was $798,144.72; $22.13 per Unit (Units started at $10 per Unit in 2014)
- Performance of investments held at year end (the META and HBI option returns are annualized values of short term investments, ignore them for now. True investment return or loss will be determined over the next year)
- Partnership returns vs Vanguard 500 Index our benchmark (2022)
- Partnership returns vs Vanguard 500 Index our benchmark (All Dates)
K1s for 2022 Taxes are due to you by March 15 and we will work to get those to you as soon as we can. We must await the 1099 from our broker to complete your K1s.
Please feel free to email if you have questions.
Happy New Year!
Randall Alan Capital
rac.llc@outlook.com
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