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The Stanford investment philosophy will not produce dazzling returns and doesn't always follow current trends, but it has proven year after year that it can protect principal and grow capital consistently.
Many examples exist to show how Stanford has gone against the investment crowd mentality of the moment and invested in stocks and bonds that were undervalued and out of favor with Wall Street at the time. During the tumultuous 1987 market collapse, SIB's portfolios were well positioned and ended the year producing double-digit returns, while the leading market indexes finished the year only marginally positive. The wisdom of this strategy was also proven in 1994 when the Federal Reserve set out one of its most aggressive series of rate hikes, and again in 1997 when the Asian Crisis sent shock waves through the global markets.
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Over the past two decades, however, the most perplexing year for investing was 1999. While other institutions' portfolio managers were annualizing returns of 30 per cent to 40 per cent or more, SIB's average return on its investment portfolios was only in the low teens. During this period most institutional and private investors believed that value investing and hedging were things of the past. Stanford steadfastly believed then as it does now, that value investing combined with a thoroughly understood and well-managed alternative strategy is the foundation from which all long-term investment success is built.
Because it avoids investment models based on
short-term strategies and outlooks, the Stanford investment philosophy has
proven year after year that it can protect principal and grow capital
consistently. The last five years have only reinforced the credibility of Stanford's investment policy.
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