Tweedy, Browne Fund Inc.’s most recent letter to shareholders.
To Our Shareholders:
If you were to use marriage as a metaphor when writingabout the financial markets over the past six months, youwould have to say the relationship is going through a difficulttime. While permanent damage has been limited, there havebeen a lot of difficult days. Volatility in the indices has beenextraordinary, baffling and hard on the emotions. If your spousewas Bank of America (BAC) (a stock we do not own) youmight be at wit’s end trying to understand his or her behavior,despite knowing a great deal about the company’s personal(financial) background. On a number of days over the pastseveral months, the intra day spread between the high and lowprice has been in excess of 10%. Nor is this an isolatedexample, if you look at equity markets around the world as wedo. There are similar examples of volatility in individualcompany stock prices that have far fewer questions surroundingtheir financial prospects than is the case with Bank of America.As an aside, if this leaves your appetite for volatility unmet, youcould go to the credit default markets for BAC’s senior debtwhere the lack of liquidity creates a pogo stick-likephenomenon. Needless to say, the credit default swap market isnot a market where we invest any of your or our hard-earnedmoney. What we do know is this is an extremely illiquid marketplace with all the caveats that suggests, yet it is frequently citedin the financial press as a barometer for a company’s health. Tous, it seems more like a place where the weekend Vegas crowdhangs out during the week. (Click to see the full letter from Scribd)