Dr. Frank James: We are a firm that's been continuously in operation under the same ownership since 1972. We started off as a family firm and now we've expanded quite a bit in size. Our philosophy is that we believe that capital preservation is very important. We want to grow the accounts as much as we can, but typically couple that with capital preservations as an overall objective.
We believe that a big mistake that's made is to lose a lot of money in bear markets. Of course investors want to do well in bull markets but you need to preserve capital in the bear markets. After all if you make 50 percent and then lose 50 percent you find your investments are not back to even, but are actually underwater.
We manage today about 2 billion in assets. We have five mutual funds. Our pacesetter, Golden Rainbow Balanced fund, was ranked number one in the nation for 2008 by Lipper. Additionally the five years and the ten-year returns were ranked as number one and received an award for that.
TWST: This has certainly been an interesting year with the turmoil in the markets, but I imagine that you found a lot of bargain stocks in this climate. So how did you do? What does it look like now that the market is rising back up again?
David James: Echo-ing my father's sentiments, we like to look for those good opportunities where we can find them by finding lower risk investments that are generally unloved by Wall Street. Some of the better investments we think actually have been in bonds lately. Specifically, if you look at what's been happening with some of the international treasury bonds, we think that sovereign bonds have been a very good investment. They have actually made good money this year while our treasury market has actually fallen. That has been a good area to have invested in overall. That's one of the areas that we have liked.
In fact, as we look at it, long sovereign bonds have returned about 8.8% in six months ending September, while our long-term treasuries market was down about 2.9%. That's been a very good area that we've been into. We've also liked some of the precious metals. With the weakening dollar, we have seen that our money base had more than doubled since the fall of 2008. That's one of the key elements to a weakening dollar, and we believe the weakening dollar will continue. As the dollar weakens precious metals should continue to make good sense. Gold, of course, is a very good investment in this environment, but so is silver. Silver has actually outperformed gold on a percentage basis this year. We also find companies that have a good international exposure are good places to be. If you look at the S&P 1500 stocks, and then screen for those companies whose sales are at least 50% from foreign or overseas sources, those stocks have done about 18.5% better than the companies that have had no foreign exposure. Those have been some of the things that we would look towards.
Tickers included in this excerpt: BWX, CLNE, GLD, LAMR, PFE, SLW
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