The Wisdom of Great Investors Wealth Building Wisdom from Some of History's
Greatest Investment Minds
Introduction
During a long-term investment journey, investors will inevitably encounter periods when they are led by their emotions. During such times investors often make decisions that can undermine their ability to build wealth.
Contained in these pages is wisdom from many of history’s greatest investment minds over the past century.
By studying their timeless principles we learn many important lessons. Two foundational beliefs are common throughout:
- Equities remain the best vehicle for building long-term wealth, despite inevitable periods of disappointment and uncertainty.1
- Building long-term wealth requires patience, discipline and an unemotional mindset.
Some of the legendary investors referenced herein include: Warren Buffett, Chairman of Berkshire Hathaway and one of the most successful investors in history; Benjamin Graham, one of the most influential investors in history and the “Father of Value Investing”; Jack Bogle, dedicated investor advocate and Founder of The Vanguard Group; and Shelby Cullom Davis, legendary investor who turned a $100,000 investment in stocks in 1947 into over $800 million at the time of his death in 1994.2
We hope this collection of wisdom serves as a valuable guide as you navigate markets in pursuit of your financial goals.
This report is authorized for use by existing shareholders. A current Clipper Fund prospectus must accompany or precede this material if it is distributed to prospective shareholders. You should carefully consider the Fund's investment objectives, risks, charges, and expenses before investing. Read the prospectus carefully before you invest or send money.
Davis Advisors is committed to communicating with our investment partners as candidly as possible because we believe our investors benefit from understanding our investment philosophy and approach. Our views and opinions include “forward-looking statements” which may or may not be accurate over the long term. Forward-looking statements can be identified by words like “believe,” “expect,” “anticipate,” or similar expressions. You should not place undue reliance on forward-looking statements, which are current as of the date of this report. We disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. While we believe we have a reasonable basis for our appraisals and we have confidence in our opinions, actual results may differ materially from those we anticipate.
Risk Disclosures. Some important risks of an investment in the Fund are: stock market risk: stock markets have periods of rising prices and periods of falling prices, including sharp declines; manager risk: poor security selection may cause the Fund to underperform relevant benchmarks; common stock risk: an adverse event may have a negative impact on a company and could result in a decline in the price of its common stock; large-capitalization companies risk: companies with $10 billion or more in market capitalization generally experience slower rates of growth in earnings per share than do mid- and small-capitalization companies; mid- and small-capitalization companies risk: companies with less than $10 billion in market capitalization typically have more limited product lines, markets and financial resources than larger companies, and may trade less frequently and in more limited volume; headline risk: the Fund may invest in a company when the company becomes the center of controversy. The company’s stock may never recover or may become worthless; focused portfolio risk: investing in a limited number of companies causes changes in the value of a single security to have a more significant effect on the value of the Fund’s total portfolio; financial services risk: investing a significant portion of assets in the financial services sector may cause the Fund to be more sensitive to systemic risk, regulatory actions, changes in interest rates, non-diversified loan portfolios, credit, and competition; foreign country risk: foreign companies may be subject to greater risk as foreign economies may not be as strong or diversified; foreign currency risk: the change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency; depositary receipts risk: depositary receipts may trade at a discount (or premium) to the underlying security and may be less liquid than the underlying securities listed on an exchange; and fees and expenses risk: the Fund may not earn enough through income and capital appreciation to offset the operating expenses of the Fund.
The graphs and charts in this report are used to illustrate specific points. No graph, chart, formula or other device can, by itself, guide an investor as to what securities should be bought or sold or when to buy or sell them. Although the facts in this report have been obtained from and are based on sources we believe to be reliable, we do not guarantee their accuracy, and such information is subject to change without notice.Broker-dealers and other financial intermediaries may charge Davis Advisors substantial fees for selling its products and providing continuing support to clients and shareholders. For example, broker-dealers and other financial intermediaries may charge: sales commissions; distribution and service fees; and record-keeping fees. In addition, payments or reimbursements may be requested for: marketing support concerning Davis Advisors’ products; placement on a list of offered products; access to sales meetings, sales representatives and management representatives; and participation in conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events, and other dealer-sponsored events. Financial advisors should not consider Davis Advisors’ payment(s) to a financial intermediary as a basis for recommending Davis Advisors.
The S&P 500® Index is an unmanaged index of
500 selected common stocks, most of which are
listed on the New York Stock Exchange. The Index
is adjusted for dividends, weighted towards stocks
with large market capitalizations and represents
approximately two-thirds of the total market value
of all domestic common stocks. The Dow Jones
Industrial Average is a price-weighted average of
30 actively traded blue chip stocks. The Dow Jones
is calculated by adding the closing prices of the
component stocks and using a divisor that is
adjusted for splits and stock dividends equal to
10% or more of the market value of an issue as
well as substitutions and mergers. The average is
quoted in points, not in dollars. Investments
cannot be made directly in an index.
Warren Buffett, Benjamin Graham, Charles Munger, and Jack Bogle are not associated in any way with Davis Selected Advisers, Davis Advisors or their affiliates.
Shares of the Clipper Fund are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.
Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756, 800.279.0279
A Market Correction is an Opportunity for the Patient, Long-Term Investor
“A market downturn doesn’t bother us. For us and our long-term investors, it is an opportunity to increase our ownership of great companies with great management at good prices. Only for short-term investors and market timers is a correction not an opportunity.”
Chairman, Berkshire Hathaway
The chart below illustrates how four different investor reactions to a market correction greatly affects the outcome of how much they receive from their investments. Four hypothetical investors each invested $10,000 in the market from January 1, 1972–December 31, 2013. During this 42 year journey, however, each investor reacted differently to the brutal bear market of 1973–1974, when the market lost more than 40% of its value. Below are their outcomes:
- Nervous Investor: Following the ’73–’74 bear market, he sold out of stocks and went to cash on January 1, 1975 for the remainder of the investment period. His ending value on December 31, 2013 was $19,554.
- Market Timer: He also went to cash on January 1, 1975 but was prescient enough to move back into stocks on January 1, 1983, at the beginning of an historic bull market. His ending account value was $260,892.
- Buy and Hold Investor: He steadfastly maintained his original position in stocks during the entire 42 year journey. His ending account value was $654,413.
- Opportunistic Investor:1 Recognizing that the ’73–’74 bear market had created opportunities for the patient, long-term investor, he contributed an additional $10,000 to his original investment on January 1, 1975. His ending account value was $1,531,092.
Long-term investors should not react emotionally to a market correction and abandon their investment plan, but instead should view it as an opportunity to purchase good businesses at attractive prices.
Davis Advisors is committed to communicating with our investment partners as candidly as possible because we believe our investors benefit from understanding our investment philosophy and approach. Our views and opinions include “forward-looking statements” which may or may not be accurate over the long term. Forward-looking statements can be identified by words like “believe,” “expect,” “anticipate,” or similar expressions. You should not place undue reliance on forward-looking statements, which are current as of the date of this report. We disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. While we believe we have a reasonable basis for our appraisals and we have confidence in our opinions, actual results may differ materially from those we anticipate.
Risk Disclosures. Some important risks of an
investment in the Fund are: stock market risk:
stock markets have periods of rising prices
and periods of falling prices, including sharp
declines; manager risk: poor security selection
may cause the Fund to underperform relevant
benchmarks; common stock risk: an adverse
event may have a negative impact on a company
and could result in a decline in the price of its
common stock; large-capitalization companies
risk: companies with $10 billion or more in
market capitalization generally experience
slower rates of growth in earnings per share
than do mid- and small-capitalization companies;
mid- and small-capitalization companies risk:
companies with less than $10 billion in market
capitalization typically have more limited product
lines, markets and financial resources than larger
companies, and may trade less frequently and in
more limited volume; headline risk: the Fund may
invest in a company when the company becomes
the center of controversy. The company’s stock
may never recover or may become worthless;
focused portfolio risk: investing in a limited
number of companies causes changes in the value
of a single security to have a more significant
effect on the value of the Fund’s total portfolio;
financial services risk: investing a significant
portion of assets in the financial services sector
may cause the Fund to be more sensitive to
systemic risk, regulatory actions, changes in
interest rates, non-diversified loan portfolios,
credit, and competition; foreign country risk:
foreign companies may be subject to greater risk
as foreign economies may not be as strong or
diversified; foreign currency risk: the change in
value of a foreign currency against the U.S. dollar
will result in a change in the U.S. dollar value of
securities denominated in that foreign currency;
depositary receipts risk: depositary receipts may
trade at a discount (or premium) to the underlying
security and may be less liquid than the underlying
securities listed on an exchange; and fees and
expenses risk: the Fund may not earn enough
through income and capital appreciation to
offset the operating expenses of the Fund. See
the prospectus for a complete description of
the principal risks.
The graphs and charts in this report are used to illustrate specific points. No graph, chart, formula or other device can, by itself, guide an investor as to what securities should be bought or sold or when to buy or sell them. Although the facts in this report have been obtained from and are based on sources we believe to be reliable, we do not guarantee their accuracy, and such information is subject to change without notice.
Broker-dealers and other financial intermediaries may charge Davis Advisors substantial fees for selling its products and providing continuing support to clients and shareholders. For example, broker-dealers and other financial intermediaries may charge: sales commissions; distribution and service fees; and record-keeping fees. In addition, payments or reimbursements may be requested for: marketing support concerning Davis Advisors’ products; placement on a list of offered products; access to sales meetings, sales representatives and management representatives; and participation in conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events, and other dealer-sponsored events. Financial advisors should not consider Davis Advisors’ payment(s) to a financial intermediary as a basis for recommending Davis Advisors.
The S&P 500® Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends, weighted towards stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. Investments cannot be made directly in an index.
Warren Buffett is not associated in any way with Davis Selected Advisers, Davis Advisors or their affiliates.
Shares of the Clipper Fund are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.
Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756, 800.279.0279
Stocks Historically Have Been the Best Way to Build Wealth, Despite Inevitable Periods of Uncertainty
“There is always something to worry about and a hundred reasons not to invest. Those who abandon stocks because of fear or uncertainty may pay a tremendous price. History has shown that a diversified portfolio of equities held for the long term has been the best way to build real wealth.”1
Legendary Investor
Illustrated below are two concepts that part of the successful long-term investor mindset:
- Stocks historically have been the best way to build wealth, despite this inevitable uncertainty.1
- Building long-term wealth requires patience, discipline and an unemotional mindset.
Highlighted below are the cumulative inflation-adjusted returns from 1925–2013 for stocks, bonds, Treasury bills, and the U.S. dollar. The myriad obstacles and crises encountered during each decade included multiple wars, the Great Depression, numerous recessions, multiple bear markets, market crashes, and major financial panics. Despite these painful and unexpected events, stocks were far and away the best choice to compound wealth. A $1 investment in stocks in 1925 compounded to $359 by 2013 after inflation versus $8.38 for bonds and $1.58 for T-bills. Remarkably, the value of $1 dropped to $0.08 over this time period due to the ravages of inflation!2
When faced with market uncertainty, reflect on the two concepts listed above. This may help you to avoid portfolio changes that can sabotage your ability to reach your financial goals.
This report is authorized for use by existing shareholders. A current Clipper Fund prospectus must accompany or precede this material if it is distributed to prospective shareholders. You should carefully consider the Fund's investment objectives, risks, charges, and expenses before investing. Read the prospectus carefully before you invest or send money.
Davis Advisors is committed to communicating with our investment partners as candidly as possible because we believe our investors benefit from understanding our investment philosophy and approach. Our views and opinions include “forward-looking statements” which may or may not be accurate over the long term. Forward-looking statements can be identified by words like “believe,” “expect,” “anticipate,” or similar expressions. You should not place undue reliance on forward-looking statements, which are current as of the date of this report. We disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. While we believe we have a reasonable basis for our appraisals and we have confidence in our opinions, actual results may differ materially from those we anticipate.
Risk Disclosures. Some important risks of an investment in the Fund are: stock market risk: stock markets have periods of rising prices and periods of falling prices, including sharp declines; manager risk: poor security selection may cause the Fund to underperform relevant benchmarks; common stock risk: an adverse event may have a negative impact on a company and could result in a decline in the price of its common stock; large-capitalization companies risk: companies with $10 billion or more in market capitalization generally experience slower rates of growth in earnings per share than do mid- and small-capitalization companies; mid- and small-capitalization companies risk: companies with less than $10 billion in market capitalization typically have more limited product lines, markets and financial resources than larger companies, and may trade less frequently and in more limited volume; headline risk: the Fund may invest in a company when the company becomes the center of controversy. The company’s stock may never recover or may become worthless; focused portfolio risk: investing in a limited number of companies causes changes in the value of a single security to have a more significant effect on the value of the Fund’s total portfolio; financial services risk: investing a significant portion of assets in the financial services sector may cause the Fund to be more sensitive to systemic risk, regulatory actions, changes in interest rates, non-diversified loan portfolios, credit, and competition; foreign country risk: foreign companies may be subject to greater risk as foreign economies may not be as strong or diversified; foreign currency risk: the change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency; depositary receipts risk: depositary receipts may trade at a discount (or premium) to the underlying security and may be less liquid than the underlying securities listed on an exchange; and fees and expenses risk: the Fund may not earn enough through income and capital appreciation to offset the operating expenses of the Fund. See the prospectus for a complete description of the principal risks.
The graphs and charts in this report are used to illustrate specific points. No graph, chart, formula or other device can, by itself, guide an investor as to what securities should be bought or sold or when to buy or sell them. Although the facts in this report have been obtained from and are based on sources we believe to be reliable, we do not guarantee their accuracy, and such information is subject to change without notice.
Broker-dealers and other financial intermediaries may charge Davis Advisors substantial fees for selling its products and providing continuing support to clients and shareholders. For example, broker-dealers and other financial intermediaries may charge: sales commissions; distribution and service fees; and record-keeping fees. In addition, payments or reimbursements may be requested for: marketing support concerning Davis Advisors’ products; placement on a list of offered products; access to sales meetings, sales representatives and management representatives; and participation in conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events, and other dealer-sponsored events. Financial advisors should not consider Davis Advisors’ payment(s) to a financial intermediary as a basis for recommending Davis Advisors.
The S&P 500® Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends, weighted towards stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue chip stocks. The Dow Jones is calculated by adding the closing prices of the component stocks and using a divisor that is adjusted for splits and stock dividends equal to 10% or more of the market value of an issue as well as substitutions and mergers. The average is quoted in points, not in dollars. Investments cannot be made directly in an index.
Shares of the Clipper Fund are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.
Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756, 800.279.0279
Be Patient and Maintain a Long-Term Perspective
“In the short term, the market is a voting machine,
but in the long term it is a weighing machine.”
Father of Value Investing
Over the short term, the market is a voting machine, with prices fluctuating unpredictably as a result of overall market sentiment and investor emotions, such as fear and greed.
Over the long term, however, the market becomes a weighing machine as a company’s stock price begins to reflect its ability to grow earnings and generate value for shareholders.
This concept is illustrated below and highlights the percentage of monthly, yearly, 5 year and 10 year positive and negative periods for the market from 1928–2013. As you can see, over short monthly periods, when stock prices are determined more by emotion than by underlying fundamentals, only 62% of periods were positive while 38% were negative. As an investor’s holding period increased, however, and stock prices began to reflect the underlying earnings power of the business, the percentage of positive periods for stocks increased, culminating in 94% of 10 year periods delivering positive returns versus only 6% delivering negative returns.
Over the long term, stock prices migrate to reflect the true, underlying value of the business. This is why patient investors have historically had the best chance to receive attractive returns from stocks.1
This report is authorized for use by existing shareholders. A current Clipper Fund prospectus must accompany or precede this material if it is distributed to prospective shareholders. You should carefully consider the Fund's investment objectives, risks, charges, and expenses before investing. Read the prospectus carefully before you invest or send money.
Davis Advisors is committed to communicating with our investment partners as candidly as possible because we believe our investors benefit from understanding our investment philosophy and approach. Our views and opinions include “forward-looking statements” which may or may not be accurate over the long term. Forward-looking statements can be identified by words like “believe,” “expect,” “anticipate,” or similar expressions. You should not place undue reliance on forward-looking statements, which are current as of the date of this report. We disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. While we believe we have a reasonable basis for our appraisals and we have confidence in our opinions, actual results may differ materially from those we anticipate
Risk Disclosures. Some important risks of an investment in the Fund are: stock market risk: stock markets have periods of rising prices and periods of falling prices, including sharp declines; manager risk: poor security selection may cause the Fund to underperform relevant benchmarks; common stock risk: an adverse event may have a negative impact on a company and could result in a decline in the price of its common stock; large-capitalization companies risk: companies with $10 billion or more in market capitalization generally experience slower rates of growth in earnings per share than do mid- and small-capitalization companies; mid- and small-capitalization companies risk: companies with less than $10 billion in market capitalization typically have more limited product lines, markets and financial resources than larger companies, and may trade less frequently and in more limited volume; headline risk: the Fund may invest in a company when the company becomes the center of controversy. The company’s stock may never recover or may become worthless; focused portfolio risk: investing in a limited number of companies causes changes in the value of a single security to have a more significant effect on the value of the Fund’s total portfolio; financial services risk: investing a significant portion of assets in the financial services sector may cause the Fund to be more sensitive to systemic risk, regulatory actions, changes in interest rates, non-diversified loan portfolios, credit, and competition; foreign country risk: foreign companies may be subject to greater risk as foreign economies may not be as strong or diversified; foreign currency risk: the change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency; depositary receipts risk: depositary receipts may trade at a discount (or premium) to the underlying security and may be less liquid than the underlying securities listed on an exchange; and fees and expenses risk: the Fund may not earn enough through income and capital appreciation to offset the operating expenses of the Fund. See the prospectus for a complete description of the principal risks.
The graphs and charts in this report are used to illustrate specific points. No graph, chart, formula or other device can, by itself, guide an investor as to what securities should be bought or sold or when to buy or sell them. Although the facts in this report have been obtained from and are based on sources we believe to be reliable, we do not guarantee their accuracy, and such information is subject to change without notice.
Broker-dealers and other financial intermediaries may charge Davis Advisors substantial fees for selling its products and providing continuing support to clients and shareholders. For example, broker-dealers and other financial intermediaries may charge: sales commissions; distribution and service fees; and record-keeping fees. In addition, payments or reimbursements may be requested for: marketing support concerning Davis Advisors’ products; placement on a list of offered products; access to sales meetings, sales representatives and management representatives; and participation in conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events, and other dealer-sponsored events. Financial advisors should not consider Davis Advisors’ payment(s) to a financial intermediary as a basis for recommending Davis Advisors.
The S&P 500® Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends, weighted towards stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue chip stocks. The Dow Jones is calculated by adding the closing prices of the component stocks and using a divisor that is adjusted for splits and stock dividends equal to 10% or more of the market value of an issue as well as substitutions and mergers. The average is quoted in points, not in dollars. Investments cannot be made directly in an index.
Benjamin Graham is not associated in any way with Davis Selected Advisers, Davis Advisors or their affiliates.
Shares of the Clipper Fund are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.
Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756, 800.279.0279
Recognize That Historically, Periods of Low Returns for Stocks Have Been Followed by Periods of Higher Returns1
“Historically, disappointing periods for the market have been followed by periods of recovery. Why? Because disappointing periods provide long-term investors the opportunity to purchase good businesses at lower prices—and lower entry prices have helped increase future returns.”
Portfolio Manager, Davis Advisors
After suffering through a painful period for stocks, investors often reduce their exposure to equities or abandon them altogether. History has shown, however, that investors should feel optimistic about the long-term potential for stocks after a disappointing period.2 The reason is explained in the chart below.
Illustrated are 10 year returns for the market from 1928 to 2013.
- The tan bars represent 10 year periods where the market returned less than 5%.
- The green bars represent the 10 year periods that followed these difficult periods.
- In every case, the 10 year period following each disappointing period produced satisfactory returns.
For example, the 1.2% average annual return for the 10 year period ending in 1974 was followed by a 14.8% average annual return for the 10 year period ending in 1984.
Furthermore, these periods of recovery averaged 13% per year.
While it cannot be known for sure what the next decade will hold for equity investors, it may be far better than the last decade. Prudent, long-term investors should consider maintaining, or adding to, their equity allocation following periods of poor returns for stocks. Investors who project the recent poor returns for stocks into the next decade, and consequently reduce their allocation to stocks, may be sabotaging their ability to build wealth.
This report is authorized for use by existing shareholders. A current Clipper Fund prospectus must accompany or precede this material if it is distributed to prospective shareholders. You should carefully consider the Fund's investment objectives, risks, charges, and expenses before investing. Read the prospectus carefully before you invest or send money.
Davis Advisors is committed to communicating with our investment partners as candidly as possible because we believe our investors benefit from understanding our investment philosophy and approach. Our views and opinions include “forward-looking statements” which may or may not be accurate over the long term. Forward-looking statements can be identified by words like “believe,” “expect,” “anticipate,” or similar expressions. You should not place undue reliance on forward-looking statements, which are current as of the date of this report. We disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. While we believe we have a reasonable basis for our appraisals and we have confidence in our opinions, actual results may differ materially from those we anticipate.
Risk Disclosures.Some important risks of an investment in the Fund are: stock market risk: stock markets have periods of rising prices and periods of falling prices, including sharp declines; manager risk: poor security selection may cause the Fund to underperform relevant benchmarks; common stock risk: an adverse event may have a negative impact on a company and could result in a decline in the price of its common stock; large-capitalization companies risk: companies with $10 billion or more in market capitalization generally experience slower rates of growth in earnings per share than do mid- and small-capitalization companies; mid- and small-capitalization companies risk: companies with less than $10 billion in market capitalization typically have more limited product lines, markets and financial resources than larger companies, and may trade less frequently and in more limited volume; headline risk: the Fund may invest in a company when the company becomes the center of controversy. The company’s stock may never recover or may become worthless; focused portfolio risk: investing in a limited number of companies causes changes in the value of a single security to have a more significant effect on the value of the Fund’s total portfolio; financial services risk: investing a significant portion of assets in the financial services sector may cause the Fund to be more sensitive to systemic risk, regulatory actions, changes in interest rates, non-diversified loan portfolios, credit, and competition; foreign country risk: foreign companies may be subject to greater risk as foreign economies may not be as strong or diversified; foreign currency risk: the change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency; depositary receipts risk: depositary receipts may trade at a discount (or premium) to the underlying security and may be less liquid than the underlying securities listed on an exchange; and fees and expenses risk: the Fund may not earn enough through income and capital appreciation to offset the operating expenses of the Fund. See the prospectus for a complete description of the principal risks.
The graphs and charts in this report are used to illustrate specific points. No graph, chart, formula or other device can, by itself, guide an investor as to what securities should be bought or sold or when to buy or sell them. Although the facts in this report have been obtained from and are based on sources we believe to be reliable, we do not guarantee their accuracy, and such information is subject to change without notice.
Broker-dealers and other financial intermediaries may charge Davis Advisors substantial fees for selling its products and providing continuing support to clients and shareholders. For example, broker-dealers and other financial intermediaries may charge: sales commissions; distribution and service fees; and record-keeping fees. In addition, payments or reimbursements may be requested for: marketing support concerning Davis Advisors’ products; placement on a list of offered products; access to sales meetings, sales representatives and management representatives; and participation in conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events, and other dealer-sponsored events. Financial advisors should not consider Davis Advisors’ payment(s) to a financial intermediary as a basis for recommending Davis Advisors.
The S&P 500® Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends, weighted towards stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue chip stocks. The Dow Jones is calculated by adding the closing prices of the component stocks and using a divisor that is adjusted for splits and stock dividends equal to 10% or more of the market value of an issue as well as substitutions and mergers. The average is quoted in points, not in dollars. Investments cannot be made directly in an index.
Shares of the Clipper Fund are not deposits or
obligations of any bank, are not guaranteed by any bank, are not insured
by the FDIC or any other agency, and involve investment risks,
including possible loss of the principal amount invested.
Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756, 800.279.0279
Don’t Let Emotions Guide Your Investment Decisions
“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. That is why we say that having a certain kind of temperament is more important than brains. You need to keep raw irrational emotion under control.”
Vice-Chairman, Berkshire Hathaway
Building long-term wealth requires resisting emotional impulses like fear and greed. Unfortunately, investors as a group too often let emotions guide their investment decisions, as the chart below illustrates.
The line in the chart represents the amount of money investors added to or removed from domestic stock funds each year from January 1997 through December 2013, while the bars represent the yearly returns for stock funds.
- After three years of stellar returns for stock funds from 1997–1999, euphoric investors added money in record amounts in 2000, just in time to experience three years of terrible returns from 2000–2002.
- Following these three terrible years, discouraged investors scaled back their contributions, right before stock funds delivered one of their best returns ever in 2003 (+30.1%).
- After experiencing terrible returns for stocks in 2008, fearful investors became cautious and pulled money from stock funds record amounts, missing subsequent double-digit returns.
When building long-term wealth, maintaining an unemotional, rational and disciplined mindset is critical. Making emotional decisions can have disastrous consequences.
This report is authorized for use by existing shareholders. A current Clipper Fund prospectus must accompany or precede this material if it is distributed to prospective shareholders. You should carefully consider the Fund's investment objectives, risks, charges, and expenses before investing. Read the prospectus carefully before you invest or send money.
Davis Advisors is committed to communicating with our investment partners as candidly as possible because we believe our investors benefit from understanding our investment philosophy and approach. Our views and opinions include “forward-looking statements” which may or may not be accurate over the long term. Forward-looking statements can be identified by words like “believe,” “expect,” “anticipate,” or similar expressions. You should not place undue reliance on forward-looking statements, which are current as of the date of this report. We disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. While we believe we have a reasonable basis for our appraisals and we have confidence in our opinions, actual results may differ materially from those we anticipate.
Risk Disclosures. Some important risks of an investment in the Fund are: stock market risk: stock markets have periods of rising prices and periods of falling prices, including sharp declines; manager risk: poor security selection may cause the Fund to underperform relevant benchmarks; common stock risk: an adverse event may have a negative impact on a company and could result in a decline in the price of its common stock; large-capitalization companies risk: companies with $10 billion or more in market capitalization generally experience slower rates of growth in earnings per share than do mid- and small-capitalization companies; mid- and small-capitalization companies risk: companies with less than $10 billion in market capitalization typically have more limited product lines, markets and financial resources than larger companies, and may trade less frequently and in more limited volume; headline risk: the Fund may invest in a company when the company becomes the center of controversy. The company’s stock may never recover or may become worthless; focused portfolio risk: investing in a limited number of companies causes changes in the value of a single security to have a more significant effect on the value of the Fund’s total portfolio; financial services risk: investing a significant portion of assets in the financial services sector may cause the Fund to be more sensitive to systemic risk, regulatory actions, changes in interest rates, non-diversified loan portfolios, credit, and competition; foreign country risk: foreign companies may be subject to greater risk as foreign economies may not be as strong or diversified; foreign currency risk: the change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency; depositary receipts risk: depositary receipts may trade at a discount (or premium) to the underlying security and may be less liquid than the underlying securities listed on an exchange; and fees and expenses risk: the Fund may not earn enough through income and capital appreciation to offset the operating expenses of the Fund. See the prospectus for a complete description of the principal risks.
The graphs and charts in this report are used to illustrate specific points. No graph, chart, formula or other device can, by itself, guide an investor as to what securities should be bought or sold or when to buy or sell them. Although the facts in this report have been obtained from and are based on sources we believe to be reliable, we do not guarantee their accuracy, and such information is subject to change without notice.
Broker-dealers and other financial intermediaries may charge Davis Advisors substantial fees for selling its products and providing continuing support to clients and shareholders. For example, broker-dealers and other financial intermediaries may charge: sales commissions; distribution and service fees; and record-keeping fees. In addition, payments or reimbursements may be requested for: marketing support concerning Davis Advisors’ products; placement on a list of offered products; access to sales meetings, sales representatives and management representatives; and participation in conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events, and other dealer-sponsored events. Financial advisors should not consider Davis Advisors’ payment(s) to a financial intermediary as a basis for recommending Davis Advisors.
Charles Munger is not associated in any way with Davis Selected Advisers, Davis Advisors or their affiliates.
Shares
of the Clipper Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the FDIC or any other
agency, and involve investment risks, including possible loss of the
principal amount invested.
Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756, 800.279.0279
Don’t Attempt to Time the Market
“The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly fifty years in this business, I do not know of anybody who has done it successfully and consistently. I don’t even know anybody who knows anybody who has done it successfully and consistently.”
Founder, The Vanguard Group
Market corrections often cause investors to abandon their investment plans—moving out of stocks when the outlook appears bleak with the intention of moving back in when things seem better. Unfortunately, successfully timing the market is practically impossible and doing it incorrectly can lead to disastrous results.
This fact is illustrated below, which compares the 20 year returns of an investor who stayed the course over the entire period to those who missed just the best 10, 30, 60, or 90 trading days. The results underscore the danger of trying to time the market:
- Staying the course over the entire 20 year period resulted in the highest return of 9.2% per year.
- Missing just the best 10 days during this 20 year period reduced the return to just 5.5% per year.
- The investor who missed the best 30 trading days over this 20 year period experienced an investment that remained flat.
- Amazingly, an investor needed only to miss the best 60 days for his return to plummet.
If stocks have historically delivered a satisfactory return to patient investors who have stayed the course, is it truly worth the risk to try to increase this return through market timing? Hoping to move out of stocks when things look bleak and back into them when things look good is a loser’s game and may actually undermine one’s ability to build wealth.
Davis Advisors is committed to communicating with our investment partners as candidly as possible because we believe our investors benefit from understanding our investment philosophy and approach. Our views and opinions include “forward-looking statements” which may or may not be accurate over the long term. Forward-looking statements can be identified by words like “believe,” “expect,” “anticipate,” or similar expressions. You should not place undue reliance on forward-looking statements, which are current as of the date of this report. We disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. While we believe we have a reasonable basis for our appraisals and we have confidence in our opinions, actual results may differ materially from those we anticipate.
Risk Disclosures. Some important risks of an investment in the Fund are: stock market risk: stock markets have periods of rising prices and periods of falling prices, including sharp declines; manager risk: poor security selection may cause the Fund to underperform relevant benchmarks; common stock risk: an adverse event may have a negative impact on a company and could result in a decline in the price of its common stock; large-capitalization companies risk: companies with $10 billion or more in market capitalization generally experience slower rates of growth in earnings per share than do mid- and small-capitalization companies; mid- and small-capitalization companies risk: companies with less than $10 billion in market capitalization typically have more limited product lines, markets and financial resources than larger companies, and may trade less frequently and in more limited volume; headline risk: the Fund may invest in a company when the company becomes the center of controversy. The company’s stock may never recover or may become worthless; focused portfolio risk: investing in a limited number of companies causes changes in the value of a single security to have a more significant effect on the value of the Fund’s total portfolio; financial services risk: investing a significant portion of assets in the financial services sector may cause the Fund to be more sensitive to systemic risk, regulatory actions, changes in interest rates, non-diversified loan portfolios, credit, and competition; foreign country risk: foreign companies may be subject to greater risk as foreign economies may not be as strong or diversified; foreign currency risk: the change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency; depositary receipts risk: depositary receipts may trade at a discount (or premium) to the underlying security and may be less liquid than the underlying securities listed on an exchange; and fees and expenses risk: the Fund may not earn enough through income and capital appreciation to offset the operating expenses of the Fund. See the prospectus for a complete description of the principal risks.
The graphs and charts in this report are used to illustrate specific points. No graph, chart, formula or other device can, by itself, guide an investor as to what securities should be bought or sold or when to buy or sell them. Although the facts in this report have been obtained from and are based on sources we believe to be reliable, we do not guarantee their accuracy, and such information is subject to change without notice.
Broker-dealers and other financial intermediaries may charge Davis Advisors substantial fees for selling its products and providing continuing support to clients and shareholders. For example, broker-dealers and other financial intermediaries may charge: sales commissions; distribution and service fees; and record-keeping fees. In addition, payments or reimbursements may be requested for: marketing support concerning Davis Advisors’ products; placement on a list of offered products; access to sales meetings, sales representatives and management representatives; and participation in conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events, and other dealer-sponsored events. Financial advisors should not consider Davis Advisors’ payment(s) to a financial intermediary as a basis for recommending Davis Advisors.
The S&P 500® Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends, weighted towards stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. Investments cannot be made directly in an index.
Jack Bogle is not associated in any way with Davis Selected Advisers, Davis Advisors or their affiliates.
Shares of the Clipper Fund are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.
Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756, 800.279.0279Understand That Short-Term Underperformance is Inevitable
“ History has shown that even the most successful investors have encountered stretches of poor performance. Such stretches are inevitable and will measure whether an investor has the conviction, courage and discipline necessary to beat the market over the long term.”
Legendary Investor, Founder of Davis Investment Discipline
When faced with short-term underperformance from an investment manager, investors may lose conviction and switch to another manager. Unfortunately, when evaluating managers, short-term performance is not a strong indicator of long-term success.
The chart below illustrates the percentage of top-performing large cap investment managers from January 1, 2004 to December 31, 2013 who suffered through a three year period of underperformance. The results are staggering:
- 95% of the top managers’ rankings fell to the bottom half of their peers for at least one three year period, and
- A full 73% ranked among the bottom quarter of their peers for at least one three year period.
Though each of the managers in the study delivered excellent long-term returns over the entire 10 year period, almost all experienced a difficult stretch along the way. Investors who recognize and prepare for the fact that short-term underperformance is inevitable— even from the best managers—may be less likely to make unnecessary and often destructive changes to their investment plans.
Davis Advisors is committed to communicating with our investment partners as candidly as possible because we believe our investors benefit from understanding our investment philosophy and approach. Our views and opinions include “forward-looking statements” which may or may not be accurate over the long term. Forward-looking statements can be identified by words like “believe,” “expect,” “anticipate,” or similar expressions. You should not place undue reliance on forward-looking statements, which are current as of the date of this report. We disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. While we believe we have a reasonable basis for our appraisals and we have confidence in our opinions, actual results may differ materially from those we anticipate..
Risk Disclosures.Some important risks of an investment in the Fund are: stock market risk: stock markets have periods of rising prices and periods of falling prices, including sharp declines; manager risk: poor security selection may cause the Fund to underperform relevant benchmarks; common stock risk: an adverse event may have a negative impact on a company and could result in a decline in the price of its common stock; large-capitalization companies risk: companies with $10 billion or more in market capitalization generally experience slower rates of growth in earnings per share than do mid- and small-capitalization companies; mid- and small-capitalization companies risk: companies with less than $10 billion in market capitalization typically have more limited product lines, markets and financial resources than larger companies, and may trade less frequently and in more limited volume; headline risk: the Fund may invest in a company when the company becomes the center of controversy. The company’s stock may never recover or may become worthless; focused portfolio risk: investing in a limited number of companies causes changes in the value of a single security to have a more significant effect on the value of the Fund’s total portfolio; financial services risk: investing a significant portion of assets in the financial services sector may cause the Fund to be more sensitive to systemic risk, regulatory actions, changes in interest rates, non-diversified loan portfolios, credit, and competition; foreign country risk: foreign companies may be subject to greater risk as foreign economies may not be as strong or diversified; foreign currency risk: the change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency; depositary receipts risk: depositary receipts may trade at a discount (or premium) to the underlying security and may be less liquid than the underlying securities listed on an exchange; and fees and expenses risk: the Fund may not earn enough through income and capital appreciation to offset the operating expenses of the Fund. See the prospectus for a complete description of the principal risks.
The graphs and charts in this report are used to illustrate specific points. No graph, chart, formula or other device can, by itself, guide an investor as to what securities should be bought or sold or when to buy or sell them. Although the facts in this report have been obtained from and are based on sources we believe to be reliable, we do not guarantee their accuracy, and such information is subject to change without notice.
Broker-dealers and other financial intermediaries may charge Davis Advisors substantial fees for selling its products and providing continuing support to clients and shareholders. For example, broker-dealers and other financial intermediaries may charge: sales commissions; distribution and service fees; and record-keeping fees. In addition, payments or reimbursements may be requested for: marketing support concerning Davis Advisors’ products; placement on a list of offered products; access to sales meetings, sales representatives and management representatives; and participation in conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events, and other dealer-sponsored events. Financial advisors should not consider Davis Advisors’ payment(s) to a financial intermediary as a basis for recommending Davis Advisors.
Shares of the Clipper Fund are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.
Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756, 800.279.0279
Utilize a Systematic, Disciplined Investment Approach
“Systematic investing will pay off ultimately, regardless of when it is begun, provided that it is adhered to conscientiously and courageously under all market conditions.”
Father of Value Investing
Systematic investing involves investing money in equal amounts at regular intervals, regardless of the market environment. For example, an investor with $10,000 to invest in stocks may opt to invest $2,500 every three months during the year. A systematic investment strategy has two key benefits:
- It encourages the unemotional disciplined mindset required to be a successful investor. More stocks are automatically purchased during periods of uncertainty when prices are low and fewer during periods of euphoria when prices are high. Such behavior can improve an investor’s chance to build wealth.
- It capitalizes on market uncertainty and volatility. Should the market drop during the investment journey, more shares are automatically purchased at more attractive prices.
The chart below shows how a hypothetical systematic investment plan would have fared during a very challenging period for investors—the brutal bear market from 1929–1954. The good news is that despite the market not breaking new highs for 25 years, the market still returned 5.4% per year. A systematic investor who committed money each year did even better, however, receiving 11.7% per year. How? By taking advantage of the volatility during this period and purchasing stocks at lower prices.
Though a sensible strategy in any environment, a systematic investment plan may be especially appealing during periods of uncertainty and volatility.
Davis Advisors is committed to communicating with our investment partners as candidly as possible because we believe our investors benefit from understanding our investment philosophy and approach. Our views and opinions include “forward-looking statements” which may or may not be accurate over the long term. Forward-looking statements can be identified by words like “believe,” “expect,” “anticipate,” or similar expressions. You should not place undue reliance on forward-looking statements, which are current as of the date of this report. We disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. While we believe we have a reasonable basis for our appraisals and we have confidence in our opinions, actual results may differ materially from those we anticipate.
Risk Disclosures. Some important risks of an investment in the Fund are: stock market risk: stock markets have periods of rising prices and periods of falling prices, including sharp declines; manager risk: poor security selection may cause the Fund to underperform relevant benchmarks; common stock risk: an adverse event may have a negative impact on a company and could result in a decline in the price of its common stock; large-capitalization companies risk: companies with $10 billion or more in market capitalization generally experience slower rates of growth in earnings per share than do mid- and small-capitalization companies; mid- and small-capitalization companies risk: companies with less than $10 billion in market capitalization typically have more limited product lines, markets and financial resources than larger companies, and may trade less frequently and in more limited volume; headline risk: the Fund may invest in a company when the company becomes the center of controversy. The company’s stock may never recover or may become worthless; focused portfolio risk: investing in a limited number of companies causes changes in the value of a single security to have a more significant effect on the value of the Fund’s total portfolio; financial services risk: investing a significant portion of assets in the financial services sector may cause the Fund to be more sensitive to systemic risk, regulatory actions, changes in interest rates, non-diversified loan portfolios, credit, and competition; foreign country risk: foreign companies may be subject to greater risk as foreign economies may not be as strong or diversified; foreign currency risk: the change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency; depositary receipts risk: depositary receipts may trade at a discount (or premium) to the underlying security and may be less liquid than the underlying securities listed on an exchange; and fees and expenses risk: the Fund may not earn enough through income and capital appreciation to offset the operating expenses of the Fund. See the prospectus for a complete description of the principal risks.
The graphs and charts in this report are used to illustrate specific points. No graph, chart, formula or other device can, by itself, guide an investor as to what securities should be bought or sold or when to buy or sell them. Although the facts in this report have been obtained from and are based on sources we believe to be reliable, we do not guarantee their accuracy, and such information is subject to change without notice.
Broker-dealers and other financial intermediaries may charge Davis Advisors substantial fees for selling its products and providing continuing support to clients and shareholders. For example, broker-dealers and other financial intermediaries may charge: sales commissions; distribution and service fees; and record-keeping fees. In addition, payments or reimbursements may be requested for: marketing support concerning Davis Advisors’ products; placement on a list of offered products; access to sales meetings, sales representatives and management representatives; and participation in conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events, and other dealer-sponsored events. Financial advisors should not consider Davis Advisors’ payment(s) to a financial intermediary as a basis for recommending Davis Advisors.
The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue chip stocks. The Dow Jones is calculated by adding the closing prices of the component stocks and using a divisor that is adjusted for splits and stock dividends equal to 10% or more of the market value of an issue as well as substitutions and mergers. The average is quoted in points, not in dollars. Investments cannot be made directly in an index.
Benjamin Graham is not associated in any way with Davis Selected Advisers, Davis Advisors or their affiliates.
Shares of the Clipper Fund are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.
Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756, 800.279.0279
Summary
“You make most of your money in a bear market, you just don’t realize it at the time.”
Legendary Investor, Founder of Davis Investment Discipline
A Market Correction is an Opportunity for the Patient, Long-Term Investor
Long-term investors should welcome market corrections as an opportunity to purchase good businesses at attractive prices.
Stocks Historically Have Been the Best Way to Build Wealth, Despite Inevitable Periods of Uncertainty
Stocks have historically outperformed all other asset classes and protected against the ravages of inflation over long periods of time, through ever-changing market, economic and political environments.
Be Patient and Maintain a Long-Term Perspective
Over the short term, stock prices will fluctuate greatly. However, over longer time periods, stock prices should ultimately reflect their true value and patient, long-term investors may be rewarded.
Recognize That Historically, Periods of Low Returns for Stocks Have Been Followed by Periods of Higher Returns
Periods of poor returns for stocks provide long-term investors with the chance to purchase good businesses at lower prices. These lower prices have helped increase the possibility of higher future returns.
Don’t Let Emotions Guide Your Investment Decisions
Keeping impulses like fear and greed in check, and maintaining an unemotional, rational, disciplined mindset is crucial to building long-term wealth.
Don’t Attempt to Time the Market
Over the long term, stocks historically have delivered a satisfactory return. Attempting to enhance this return by trying to move into and out of stocks based on the market environment is a loser’s game.
Understand That Short-Term Underperformance is Inevitable
Almost all great investment managers go through periods of underperformance. When evaluating a manager, build in this expectation as it can help you to avoid making a potentially damaging manager change.
Utilize a Systematic, Disciplined Investment Approach
Such an approach is valuable during challenging periods for the market because it allows the long-term investor to seek taking advantage of volatility— purchasing more shares when prices are low.
This report is authorized for use by existing shareholders. A current Clipper Fund prospectus must accompany or precede this material if it is distributed to prospective shareholders. You should carefully consider the Fund's investment objectives, risks, charges, and expenses before investing. Read the prospectus carefully before you invest or send money.
Davis Advisors is committed to communicating with our investment partners as candidly as possible because we believe our investors benefit from understanding our investment philosophy and approach. Our views and opinions include “forward-looking statements” which may or may not be accurate over the long term. Forward-looking statements can be identified by words like “believe,” “expect,” “anticipate,” or similar expressions. You should not place undue reliance on forward-looking statements, which are current as of the date of this report. We disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. While we believe we have a reasonable basis for our appraisals and we have confidence in our opinions, actual results may differ materially from those we anticipate.
Risk Disclosures. Some important risks of an investment in the Fund are: stock market risk: stock markets have periods of rising prices and periods of falling prices, including sharp declines; manager risk: poor security selection may cause the Fund to underperform relevant benchmarks; common stock risk: an adverse event may have a negative impact on a company and could result in a decline in the price of its common stock; large-capitalization companies risk: companies with $10 billion or more in market capitalization generally experience slower rates of growth in earnings per share than do mid- and small-capitalization companies; mid- and small-capitalization companies risk: companies with less than $10 billion in market capitalization typically have more limited product lines, markets and financial resources than larger companies, and may trade less frequently and in more limited volume; headline risk: the Fund may invest in a company when the company becomes the center of controversy. The company’s stock may never recover or may become worthless; focused portfolio risk: investing in a limited number of companies causes changes in the value of a single security to have a more significant effect on the value of the Fund’s total portfolio; financial services risk: investing a significant portion of assets in the financial services sector may cause the Fund to be more sensitive to systemic risk, regulatory actions, changes in interest rates, non-diversified loan portfolios, credit, and competition; foreign country risk: foreign companies may be subject to greater risk as foreign economies may not be as strong or diversified; foreign currency risk: the change in value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of securities denominated in that foreign currency; depositary receipts risk: depositary receipts may trade at a discount (or premium) to the underlying security and may be less liquid than the underlying securities listed on an exchange; and fees and expenses risk: the Fund may not earn enough through income and capital appreciation to offset the operating expenses of the Fund.
The graphs and charts in this report are used to illustrate specific points. No graph, chart, formula or other device can, by itself, guide an investor as to what securities should be bought or sold or when to buy or sell them. Although the facts in this report have been obtained from and are based on sources we believe to be reliable, we do not guarantee their accuracy, and such information is subject to change without notice.
Broker-dealers and other financial intermediaries may charge Davis Advisors substantial fees for selling its products and providing continuing support to clients and shareholders. For example, broker-dealers and other financial intermediaries may charge: sales commissions; distribution and service fees; and record-keeping fees. In addition, payments or reimbursements may be requested for: marketing support concerning Davis Advisors’ products; placement on a list of offered products; access to sales meetings, sales representatives and management representatives; and participation in conferences or seminars, sales or training programs for invited registered representatives and other employees, client and investor events, and other dealer-sponsored events. Financial advisors should not consider Davis Advisors’ payment(s) to a financial intermediary as a basis for recommending Davis Advisors.
The S&P 500® Index is an unmanaged index of 500 selected common stocks, most of which are listed on the New York Stock Exchange. The Index is adjusted for dividends, weighted towards stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue chip stocks. The Dow Jones is calculated by adding the closing prices of the component stocks and using a divisor that is adjusted for splits and stock dividends equal to 10% or more of the market value of an issue as well as substitutions and mergers. The average is quoted in points, not in dollars. Investments cannot be made directly in an index.
Warren Buffett, Benjamin Graham, Charles Munger, and Jack Bogle are not associated in any way with Davis Selected Advisers, Davis Advisors or their affiliates.
Shares of the Clipper Fund are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.
Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756, 800.279.0279