Portfolio Performance

• The portfolio is up 9.6% year-to-date through the previous day's close, with a balance of nearly $637,000.
• This represents a significant improvement from the previous year, having already surpassed last year's total return through just the first three quarters.

Current Asset Allocation

The current asset allocation is approximately 60% equity.

• This includes 52.73% in pure equity positions and an additional 15.83% in buffer funds that provide equity-like exposure with downside protection, for a total of 68.56% equity exposure.

Key Holdings and Recent Changes

• There has been an increased position in Central Securities Corp, a closed-end fund with a strong long-term track record.
• The Calamos Timpani small cap growth fund is up about 30% year-to-date after previously underperforming.
• Buffer funds continue to be used for downside protection.
• The Rational special situations fund is up nearly 9% over one year in the fixed income space.
• The Vanguard dividend appreciation fund has been maintained.
• Exposure to emerging markets through India is up 35% over the last year.
• There has been a shift from healthcare to energy sector exposure.
• An addition was made to the VanEck Morningstar Wide Moat ETF, an actively managed fund focusing on companies with sustainable competitive advantages.

Portfolio Manager's Strategy

• The strategy involves actively managing the buffer fund exposure, rotating into pure equity positions when opportunities arise and vice versa based on market conditions.
• The base case remains a soft landing for the economy, but there are concerns about potential inflationary pressures re-emerging.

Inflation Concerns

• Base effects are making year-over-year comparisons easier.
• Increased government spending and stimulus talks from both political parties are ongoing.
• China's economic acceleration and stimulus package are contributing to the situation.
• Rising commodity prices are observed, both in hard and soft commodities.

Fixed Income Positioning

• The positioning is cautious regarding longer-duration fixed income due to these inflationary concerns.
• Variable rate bond funds are utilized for fixed income exposure.

Political Considerations

• Potential impacts of different outcomes on markets and economic policy heading into the next election cycle were discussed.
• The rising cost of servicing U.S. government debt was noted as a long-term concern, with interest payments now exceeding defense spending.

Market Expansion Opportunities

• Opportunities for further market expansion through broadening beyond the 'Magnificent Seven' large tech stocks that have driven much of the recent gains were identified.
• Balancing long-term growth objectives with risk management and potential liquidity needs was extensively discussed.

Investment Policy Statement (IPS)

• The current IPS treats this as long-term money with no expected liquidity needs for at least 7 years.
• Any fundamental change to this approach would require revising the IPS.

Risk Management Options

• There is a potential for moving more assets to cash or lower-risk investments if the portfolio reaches certain gain thresholds.
• The portfolio is treated like an endowment, taking regular distributions.
• There is an increasing use of buffer funds or other downside protection strategies during periods of heightened risk.
• Emphasis is placed on the ability to quickly adjust positioning if market conditions deteriorate, citing the research team's track record of identifying major market shifts.

Drawdowns and Diversification

• Drawdowns are an inherent part of equity investing, but a diversified portfolio of quality companies reduces the risk of permanent capital impairment compared to concentrated or speculative positions.
• The group ultimately reaffirmed the current long-term growth mandate while acknowledging the importance of ongoing risk monitoring and having contingency plans in place.