We wish we were celebrating our 25th year in business with you right about now. For those of you who could have made it to our headquarters in Boca Raton, we had planned on raising a glass and thanking you in person for being part of our success over the past 25 years. Given the circumstances, we are forced to have a virtual toast and to thank you from a distance. Since we earmarked funds for the reception we were not able to host, Noesis made a donation to Feeding South Florida to help the less fortunate during COVID.
2020 has been turned upside down with the COVID-19 virus and we are more concerned with your well-being and safety than we are with commemorating our silver anniversary. That said, we do want to share our perspective on what has transpired since we formed the company. Much has happened since then, both in the world and in our own world here at Noesis.
We take a look back at the last quarter-century, noting important events and how we addressed some of them in newsletters past; then we hand over the keys to the keyboard to Nico to reflect on the past 25 years of Noesis and how we got to where we are today.
1995-2005: The First Ten Years
When we started in the business a new era of technology was taking the world by storm – the internet had suddenly created a new industry – the dot.com period had begun! Life was interrupted by not one but two critical events.
The dot.com bubble burst in the early part of 2000; many internet startups failed, and despite being the darlings of Wall Street for a few years, too many quarters of no earnings and burning through capital led to the demise of thousands of these companies, which in turn led to a bear market. We commented back then:
During the second quarter, investors experienced one of the most volatile markets in history…$2 trillion of market value disappeared in one week alone…Speculative expectations reached extremes based on any rational standards and, in many cases, the lack of profitability and financial strength were completely ignored…We believe that there are attractive long-term buying opportunities in today’s market. Accordingly, we will take advantage of the short-term volatility resulting from investors’ emotions by buying high-quality stocks in beaten-down sectors that offer promising growth potential. Markets are rational in the long run and ultimately will reflect fundamentals.
A year later the improbable happened – a major terrorist attack on U.S. soil. 9/11, as it will be forever known, is a day most Americans will never forget:
There is no doubt that the U.S. economy is facing abnormal stresses and, in fact, may have entered a recession. However, we believe that near term weakness will not alter long-term prospects…Many stocks have lost over half of their value from their highs and, as a result, current market valuation appears attractive. We believe that some investment opportunities are emerging.
2005-2010: The Middle Five Years
For such a short period we sure had some critical events! As 2006 and 2007 saw the top of the housing market, 2008 and 2009 brought about the collapse of our economy, the financial and housing markets. The Great Recession started, and we were prudent around this time in terms of investing, as we wrote back then.
While investment strategies must include defensive considerations, it is important to also focus on longer range opportunities…We should bear in mind that in previous business cycles equity markets normally began to recover before the economy hit bottom and we are hopeful that this pattern will be repeated in the current cycle…As these difficult conditions persist, frustration, doubt and fear occupy the minds of many investors, professional and amateur alike, causing many to abandon their discipline. However, this is exactly the time when focus and discipline is sorely required…When the environment is as bad as we have been experiencing, it is natural to be pessimistic. We should not invest emotionally when the market is so volatile.
2011-2020: The Recent Ten Years
We saw the Eurozone crisis from 2010-2012, and then along came trade tensions, specifically with China but with other countries as well.
Stock markets worldwide have been selling off and extremely volatile since late July, with investors understandably anxious about the current economic situation. However, the multinational companies that we follow remain well equipped financially with solid balance sheets and strong cash flow generations…We favor holding good businesses with predictable earnings by paying a reasonable discount to the true values of the businesses.
With the recent market turmoil, you might wonder why we remain optimistic. As we have stated in the past, market volatility is our friend, not our foe. When we consider investment to be the ownership of good businesses, we use short-term market swings to reposition our portfolios, to participate in long-term opportunities, or to benefit from discrepancies between price and value. If all this sounds familiar, our past letters have been effective.
We could write at length about the novel coronavirus COVID-19, and indeed we did address it in each of our previous two newsletters this year. Our lives have been altered by this pandemic.
What Is Different?
Technology has proliferated – we now have devices we hold in our hands that have more computing power and processing speed than the equipment used to put the first astronauts on the moon! We have a new generation of people that do not know life without the internet, email, smartphones, laptops, e-commerce. Now we are witnessing the advent of Zoom and other video conferencing platforms.
Some of this is reflected by the change in the Dow Jones 30 Index since 1995. Only twelve companies remain members in the current index – 3M, American Express, Boeing, Caterpillar, Chevron, Coke, IBM, JP Morgan, McDonald’s, Merck, Proctor & Gamble, and Disney. Do you remember the 18 that are no longer in the index? Allied-Signal, Alcoa, AT&T, Bethlehem Steel, DuPont, Eastman Kodak, Exxon, GE, GM, Goodyear, International Paper, Philip Morris, Sears, Texaco, Union Carbide, United Technologies, Westinghouse, and Woolworth.
Throughout it all, Noesis remained and remains steadfast in its commitment to you, our clients. We have not mentioned the countless hurricanes that have threatened and/or disrupted our headquarters in Florida, and we are grateful to our staff for responding in each and every case to ensure our clients were taken care of.
Now, as mentioned, we hear from our Founder & CEO, Nico Letschert, on his perspective of Noesis’ last quarter-century:
THE NOESIS (HI)STORY
In 1995 Noesis Capital Management Corp was established as a Portfolio Management company. Our small team’s objective was to introduce the Registered Investment Advisor (RIA) model of transparency, fiduciary responsibility as well as ethics to the broad audience here in Florida.
Critical components of this model included introducing an independent custodian to hold your assets, offering lower costs, and minimizing conflicts of interests. In 1995 this concept was new; the investment advisory world was controlled by banks and brokerage firms worldwide.
Our mission was to bring “Peace of Mind” to clients that were transitioning into retirement or were retired.
Over the years you asked us for additional expertise in educational, retirement, and legacy planning. We added Chartered Financial Analysts (CFA), Certified Public Accountants (CPA) and Certified Financial Planners (CFP) to Noesis’ team to better meet your needs. You drove us to constantly better ourselves, expand our knowledge and competencies, and to learn all the time. Noesis stands for “the process of understanding.” It was only natural that we paid for staff’s professional education and attending conferences worldwide.
Noesis grew assets under management (AUM) without advertising or marketing budgets; instead, we invested in our people and relied on our clients to refer us new business – which we thank you profusely for! We have 17 relationships with us for more than 20 years, 107 with us for 15 years, and 172 for 10 years.
You, our clients/friends, transitioned Noesis from a portfolio manager to a wealth manager. Today, most advisors call themselves wealth managers. To me, wealth management means:
- Knowing and caring for you and your families
- Understanding your personal and financial circumstances
- Financial Planning and implementing these plans, so we can we manage your assets and meet your long-term objectives.
The last ten or so years our growth continued. Thank you for the many family members and friends you referred and thanks to our independent custodian who continues to refer clients to Noesis from all over the world. We are truly honored by all the support you are giving us. This gives us the motivation and responsibility to continue improving the way we manage your families’ needs.
We added professionals to our team from the U.S., Asia, Europe, and Latin America. You can see our team pictures on our website. We are still one team with complementary skill sets, all working together to meet your financial goals. Client’s/family’s needs became more complex in this fast-changing world and because of family members living in different parts of the U.S. and the world. Again, you drove Noesis to improve our knowledge and to expand internationally. Noesis opened its European office near Amsterdam in 2019. We are now a global team, working for you. Noesis’ culture has not changed. Our objective still is and will always be to care and to meet your family’s objectives. Transparency, fiduciary, and an independent custodian are the mainstays of the RIA model. It continues to be accepted by clients as the best solution here in the U.S. – and remember our audacious goal of introducing the RIA model to the world.
I like to believe that today many clients see Noesis as their trusted advisor and confidence partner. We will continue to invest in Noesis, keep learning and improving our services. We want to be your family’s go-to team to listen to and respond to your confidential questions and concerns regarding retirement & succession planning, legacy, and philanthropy.
More and more of Noesis clients are families in business – second and third generation family members, as well as American professionals living overseas. We learn from all of you and again, you drive the Noesis team to keep growing our knowledge. Because of you we are committed and motivated every day.
So much happened the last 25 years, including 2020. We sailed through all the storms that are mentioned in this letter and were able to help you reach your destination. Listening to and understanding each other, teamwork, a prudent investment philosophy and a disciplined approach will guide us through the storms that we will encounter in the next 25 years.
Noesis’ commitment to you will not change, we understand the importance of meeting your goals and objectives.
It has been a lot of fun for all of us to be on your team!
Thank you very much,