Investment Club Annual Summary

Investors:

I hope you all had a great holiday. I figured we’d wrap up the year with a performance summary in U.S. dollars, and then disclose what purchases we have recently made.

In short, we had an aberrational year. We've beaten the S&P 500 index now for six straight years, but 2008 was highly unusual. According to yesterday’s Wall Street Journal, the 2008 best performing diversified U.S. stock funds with assets exceeding $1 billion were the American Century Equity Income and the Parnassus Equity Income fund. For the year, they are down 20.1% and down 23% respectively.

In U.S. dollars, our account dropped 18.8% for the year. If the Wall Street Journal is correct we have beaten every large diversified fund in the U.S. during 2008.

A tremendous amount of luck went into this performance. We beat the International index by 32.4%, the Vanguard S&P 500 index by 19.1%, the emerging markets index by 36.5%, the small cap index by 18.7%, the mid cap index by 23.6% and the Industrials index by 22.1%
*(using prices from market close for 01/05/2009)

IRR
PortfolioValue
Maniacle Members of the Mausoleum
-18.8%
266,074.86
Vanguard Int'l Equity Index - Europe (VEURX)
-51.2%
167,868.10

IRR
PortfolioValue
Maniacle Members of the Mausoleum
-18.8%
266,074.86
Vanguard 500 Index Fund (VFINX)
-37.9%
208,367.58



IRR
PortfolioValue
Maniacle Members of the Mausoleum
-18.8%
266,074.86
Vanguard Emerging Markets Index Fund (VEIEX)
-55.3%
155,325.64


IRR
PortfolioValue
Maniacle Members of the Mausoleum
-18.8%
266,074.86
Vanguard Small Cap Index Fund (NAESX)
-37.5%
209,402.45


IRR
PortfolioValue
Maniacle Members of the Mausoleum
-18.8%
266,074.86
Vanguard Mid-Cap Index Fund (VIMSX)
-42.4%
194,654.39


IRR
PortfolioValue
Maniacle Members of the Mausoleum
-18.8%
266,074.86
VANGUARD INDUSTRIALS INDEX FD (VINAX)
-40.9%
199,223.17

In Canadian dollar terms (the above performances are in U.S. dollars) we have gained roughly 4% this year. I haven’t confirmed this, but I believe that, in Canadian dollars, we have beaten every diversified Canadian equity mutual fund as well, during 2008.

This kind of performance, of course, requires a lot more luck than skill. We didn’t do anything stupid, and we had a lot of luck along the way.

Notably, our Anheuser Busch sale to Inbev made us plenty. We couldn’t have seen this coming, but we made plenty of money off the deal. We also had a high percentage of our portfolio in WalMart, which may have been the best performing blue chip stock on the New York Stock Exchange this year. Our Coca cola and our Simpson Manufacturing shares also held their own this year. I was frustrated that they didn’t drop, but at least their stubbornness to fall gave us a (meaningless in the long term) feather in our cap when it comes to bragging rights.

Ironically, having a healthy portion of the international index dragged our performance down somewhat this year. But overall, we’re very happy that it’s down. This lead me to place a new order for some more shares of the Vanguard first world international exchange traded fund this morning.

This morning’s new orders

This morning, I placed the following new orders: 1 share of Berkshire Hathaway, 100 shares of Pfizer, 75 shares of the VEA index and 300 new shares of USG. United States Gypsum is still low in price, but since our last purchase it has risen 48%--which is a bit of pain. That said, it is still very cheap.

Given the low commission fee that we pay, the 4 equity orders above will cost a grand total of $40 Canadian, or $1.90 per person.

Thanks,
Andrew