Strategy
Georgetown Collegiate Investors’ goal during the historically turbulent markets of the 2008 economic recession was to preserve capital amidst the collapse of the global financial markets. The fund witnessed the bankruptcy of Lehman Brothers, merger of Bank of America and Merrill Lynch, the failure of the U.S. automotive industry, the crisis of AIG, and the collapse of commodity prices. While the investment landscape was irreversibly changing throughout the year, Georgetown Collegiate Investors was well positioned to gain. A considerable injection of fresh capital from new members each year boosted its already sizable cash reserves, and trailing stops on its summer investments liquidate many positions over each summer, helping GCI avoid further losses heading into each school year. In 2009, GCI underwent several of administrative modifications. For example, the GCI board enrolled the entire portfolio in TD Ameritrade’s Dividend Reinvestment Program. Instead of accepting dividends as cash income, they are now reinvested as partial shares and should provide exceptional appreciation.
GCI is a company invested primarily in equities. With the exceptionally large cash reserves, GCI strives to capture the greatest upside when the markets inevitably rebounded. As the markets dropped approximately 30%, GCI invested in several securities hoping to find value at the severely depressed prices. Despite uncertainty in the short run, the valuation and appeal of the U.S. economy remains strong in the long term. GCI encourages all members to actively follow new developments in the global financial markets as the summer progresses. Members pay particularly close attention to the housing market (housing starts, Case-Shiller Index), consumer sentiment, the unfreezing of credit (decreasing LIBOR), increased appetite for risk (increased Treasury yields, decreasing gold prices), improved corporate earnings, and other indicators. Also, GCI pays attention to the tug-of-war on commodity prices, as energy prices factor in fluctuating global demand, and continued government spending threatens to spur inflation. The fund's holdings could struggle for several reasons, if the markets surprise members' expectations. However, shareholders should be confident that GCI’s portfolio is well positioned to weather future struggles in the global financial markets. GCI has complete confidence that it will continue its history of success despite the current economic crisis.