Amen of the Week: “By the late 1970’s, Mesa often took sizable stock positions in other oil companies. We would sometimes suggest to management that certain actions might increase the value of the stock. The response was generally cool, to put it mildly. The standard reply was, in effect, If you don't like the way we run the company, then sell your stock. That's like saying, If you don't like the way the gardener mows your lawn, sell your house.” - T. Boone Pickens, founder of Mesa (from Boone by T. Boone Pickens, 1987) Just for fun, the next time you meet someone new at a party, bring up the subject of shareholder democracy. You’ll see their eyes immediately glaze over and then dart around the room seeking an excuse to escape the torture of your presence. That’s too bad, because this seemingly boring topic is actually quite interesting ... and important. Democracy is a great thing, or at least that's what we red-blooded Americans were taught at a tender age. But there's a glaring contradiction. The track records of other democracies (pre and post America’s birth) have not been so good. Somehow America has been different. How so? The comprehensive answer obviously extends beyond the scope of this one-page missive. (For that, I’ll refer you to Facebook to make enemies with all your friends debating what's right and wrong with America.) I’ll offer only this observation: the birth of our democracy coincided with the birth of modern capitalism, fueled in large part by the development of truly public capital markets (ergo, publicly traded stocks and bonds). This enabled more diffuse ownership and thus more opportunity than was possible in earlier eras. More businesses were formed, more risk was taken, more jobs were created, and more innovations improved our everyday lives. America's early years were shaped by this participatory economy, not just our participatory government. People weren’t just voting at the ballot box each year; they were voting each day -- consumers choosing which product to buy, employees as to which employer to join, investors as to which business to back. A participatory economy was born. A middle class was born. Study the profiles of the Forbes 400, and you’ll quickly see one commonality: they’re all owners. Whether self-made or inherited, their fortunes were built by owning something. Most commonly, this “something” is a business. Since many of these companies are publicly traded, regular folks have had the opportunity to invest right alongside them. For example, some of the top 20 of the Forbes 400 made their fortunes in these eight companies: Amazon, Facebook, Nike, Google, Wal-Mart, Microsoft, Oracle, and Berkshire Hathaway. Granted, there are caveats. For instance, public company executives often treat themselves to extra perks at the expense of public investors. So the system is not always perfectly equitable for the small guy. Admittedly, shareholder democracy is messy and imperfect -- just as with government democracies. Borrowing from Churchill, it is the worst form of an economy … except for all the others. Grumpy Uncles among you will also point out that much of the public company wealth was built prior to their initial public offerings (IPO’s). Thus, public investors did not participate from the ground up. This is true. Regardless, public investors have participated in plenty of the wealth creation. Of the eight stocks mentioned above, six have risen by over 100x since their IPO’s.* Facebook and Google, the relative newbies, have not risen by that magnitude (and might never). With all these naysayers' valid criticisms acknowledged, I’m merely trying to make the point that small investors have had the opportunity to buy and hold shares in the exact same securities that helped some of the world’s best entrepreneurs attain Forbes 400 status. Isn’t that cool? Isn’t that the type of inclusive economy that we want to encourage and promote? Alas, I fear that we’re going in the opposite direction. More than one young-ish person has remarked to me in the past week that it doesn’t really occur to folks in their generation that they can save their money into shares of great companies that they admire. That needs to change. It’s not good for the republic. The legendary investor Sir John Templeton used to advocate that we should encourage all citizens to be shareholders. It would help people understand business. It would help them accumulate wealth over time. It would help them attain independence. It would give them self-esteem. Before closing, please note that Fielder has a new address. Stop by for a visit sometime: Fielder Capital Group LLC 535 Fifth Avenue, Suite 602 New York, New York 10017 Yours in the Field, Frank Byrd, CFA *Per Chris Mayer, 100 Baggers (2015) Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

“Valuing personal connections at a time when so many people sit alone in front of screens; aspiring to build human relationships in an age when so many issues polarize so many; and acting ethically, even if it costs more, when corners are routinely cut – these are honorable pursuits, at the core of what we set out to be.” - Howard Schultz, founder and CEO of Starbucks (Onward by Howard Schulz, 2011) This makes no sense whatsoever … This is a photo I snapped at the Memphis airport two years ago. As with any Starbucks anywhere, there is a place nearby selling coffee much cheaper – and with no line. I recall a mini-research project I conducted on Starbucks in 1999 when I was a business school student. Starbucks was no secret back then. They were everywhere in New York – all with lines. My objective was to determine whether there was anything truly special about the coffee. In other words, was this a Coke in the making? Was there anything particular about its taste that made customers willing to spend 3-times as much money and time to procure a coveted cup? Finding no research on this subject online, I resorted to standing outside a Starbucks on Broadway and 110th in 1999, and I polled customers entering the store. What my anecdotal conversations revealed was that most folks were relatively neutral on the coffee itself. Less than half said it was the taste that drew them in; most could not articulate a cohesive reason for why they were enduring Starbucks’ high prices and long lines. If its coffee was not the equivalent of Coke’s secret formula, Starbucks allure, I reasoned, must be derived from its leather chairs and “sexy” merchandising of coffee. These were not competitive advantages that would sustain the assault of skilled competitors over time. In other words, there was no moat around this business. With a rich price/earnings (P/E) ratio in late 1999 of ~40x (more than double the S&P 500’s long-term historic average), I reasoned that Starbucks was grossly over-valued at the time. So much for being smart. The stock has grown 17-fold in the ensuing 16 years. Many copy cats did their best to steal some of the company’s growth opportunity. I recall seeing several such contenders boldly open up right across the street from a Starbucks throughout New York in the 2000’s. Surely these competitors would eat Starbucks’ lunch – or at least some of it. Nevertheless, Starbucks, for reasons I could not comprehend, still drew the lines. Looking back, I now understand Starbuck’s magic. It was founder Howard Schultz, who remains the company’s CEO to this day. He’s a reminder that people matter. A lot. Great CEO’s can create enormous value – even in seemingly mundane businesses with no obvious competitive advantages. Starbucks is also a great example of how a company’s price/earnings ratio may be a lousy proxy for a company’s intrinsic value. In Berkshire Hathaway’s 2000 annual report, Warren Buffett warned that, “Common yardsticks such as dividend yield, the ratio of price to earnings or to book value, and even growth rates have nothing to do with valuation except to the extent they provide clues to the amount and timing of cash flows into and from the business.” For more information on why a low P/E stock might be overvalued and a high P/E stock undervalued, please see my video lecture on the subject to Columbia Business School students in 2013. Lastly, Starbucks is a painful reminder that I have dedicated far too much of my time and energy the past seven years to researching the economy, inflation, and China real estate. No doubt I would be far better off today had I focused those hours instead on hunting for special businesses run by special people. Lesson learned. The good news is that such a focus is not only better for one’s long-term wealth, it is also a more interesting and inspiring way to lead one’s life. This is where I could use your help. Please let me know whenever you have an “aha” moment – when you spot a special company or a special leader. It might be a company’s product that you buy, or perhaps even a competitor you hate, yet admire at the same time. My ultimate ambition is to enlist the help of you, my clients and friends, in Fielder’s hunt for the truly special. Keep those eyes and ears open! (Please note: Fielder has no opinion on Starbucks stock. We share the above solely as a case study to illustrate certain principles. We have not conducted research on Starbucks and thus have no educated view on the prospects for the stock going forward.) Yours in the Field, Frank Byrd, CPA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Amen of the Week: "While I classify myself as a contrarian by nature, I always make sure I have plenty of conventional, hard analytical thinking around to tell me why my latest brainstorm makes no sense and won't work." -Richard Jenrette, co-founder of DLJ (from the Contrarian Manager) I’m wrong ... a lot. I bet you’re not used to hearing someone admit that. That’s too bad because the truth is that all of us are wrong a lot – especially when it comes to investing. Last spring I gave a lecture on “My Biggest Mistake” to the Advanced Investment Research class at Columbia Business School. I described how in the mid-2000’s I was seduced into believing Borders Books was an under-valued, attractive investment. With the benefit of hindsight, I share lessons learned. One of those lessons is to incorporate the use of Analysis of Competing Hypotheses (ACH), a research method developed by the CIA in the 1970s. You can see the video of my presentation here. For those of you in “truth seeking” professions, you can learn more about ACH in a video of a separate lecture I gave earlier this year up at Columbia (“The Truth Map”). A good friend once told me how incredibly nice he found hedge fund analysts to be. He had joined a hedge fund to head up their legal research efforts, leaving behind his role as a partner with a top global law firm. He gushed at how much nicer he found his new colleagues were. My response was, “That’s because they’re wrong all the time.” The best analysts at the best firms are constantly reminded how fallible their judgement is, so they cannot help but develop a little humility. Unfortunately, most people, especially in high-powered positions, are insulated from this reality check. Being wrong a lot is something we should all embrace. That extends to all parts of our lives. We’re wrong far more than we want to acknowledge – to ourselves, and certainly to others. This applies to our judgments on other people, on politics, on everything. My deeply rooted libertarian views, I believe, are well-reasoned, yet I have good friends with polar opposite philosophies. Some of these people are much smarter and far more successful than me. How can this help but keep me on my toes, constantly rethinking and reconsidering my views. That’s one of the benefits of living in New York. It keeps me from succumbing to the illusion that all who disagree with me must be morons. If we accept being wrong as a frequent inevitability, the best solution is to learn how to recognize it and change course quickly. We did this with Borders, and that mistake was thankfully more than overshadowed by successes in other investments that year. Being quick to spot and then own up to mistakes, however, requires being in the right environment – one that accepts error. Exploration, discovery, and enlightenment happen no other way. Based on my experience, that type of culture not only produces better results but a more personally fulfilling and sustainable organization. Yours in the Field, Frank Byrd, CFA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder

Amen of the Week: “The people who are the most successful are the ones who listen most closely to the customer. We follow the two ears, one mouth rule here.” - Andy Taylor, Exec. Chrmn, former CEO of Enterprise Rent-a-Car (and son of founder Jack Taylor) This past year I’ve been on a kick of reading autobiographies by founders of great businesses. It has been an eye-opening break from my earlier diet of investing & finance books, and I’ve resolved to stay on this path. One of the first I chose to read was Exceeding Customer Expectations by Kirk Kazanjian. (While not an autobiography, it’s as close as we’ve got for Enterprise’s founder Jack Taylor and his son Andy. They opened their doors to Kazanijian and gave him full access to write their story.) For the past couple of decades I’ve been a loyal customer of Enterprise Rent-a-Car. The relationship started out simply because I was a cheapskate. I was fresh out of college on a tight budget and was simply looking for the cheapest car I could rent. They offered to come pick me up. One of my first impressions was that its employees dressed and behaved as professionally as my colleagues at Merrill Lynch (where I worked at the time). I distinctly remember wondering how a car rental company could attract such high caliber employees. They were so polite, so genuinely eager to please. As I began traveling more and experimenting with Enterprise locations all over the country, as well as with various competitors’ locations, it really sunk in that Enterprise had the best people and offered among the lowest prices in whatever city I was in -- even overseas. The older I get, the more impressed I am with truly great leadership. Mantras and platitudes are easy, but execution is damn hard. How did Enterprise build such a strong, consistent culture across so many locations staffed with so many people? How did Jack and Andy Taylor replicate their values into a team of managers, who in turn instilled these values in their new hires? How did they breathe life into this organization and teach it to keep breathing on its own? Today it’s easy for us to be impressed with new, disruptive technology companies. Uber is truly a gift to humankind and deserves all the attention it gets for improving our lives with its “zero-to-one” innovation. Yet, Enterprise is also a disruptor and innovator. It just took a slower, lower key path, quietly accomplishing this feat over decades. So let us be sure that we remember to honor those entrepreneurs who have steadfastly built great enterprises over many years. They too have enriched the lives of customers and employees. Companies like this don’t happen by accident. They require a committed leader with a long-term orientation and an ownership mentality. Often, that is a founder, someone driven by a sense of purpose other than goosing the stock above his options strike price. There are, of course, non-founder CEO’s who think and act like owners but they’re the exception, at least based on my own observations over the years. For those of us old enough to have grown up thinking McDonalds was the most magical place on the planet, we know that its star has faded steadily ever since founder Ray Kroc retired in 1974. Today McDonalds is getting its lunch eaten by the likes of Chipotle (which is still run by founder Steve Ells). Enterprise has remained a private company, but fortunately, there are over 300 publicly traded US-based companies that are run by founders. If you’d like to receive a list of these companies, please feel free to email me. Yours in the Field, Frank Byrd, CFA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Amen of the Week: “The great enemy of the truth is very often not the lie -- deliberate, contrived and dishonest -- but the myth -- persistent, persuasive and unrealistic.” - John F. Kennedy Is your life savings in Wall Street mystery meat? Does your adviser speak in terms like “non-correlation” and show you pretty pie charts with your money spread across a dozen “asset classes”? Be honest with yourself: Does this really make sense to you? Or have you reached the point that you’re simply saying, “I just trust my adviser to put my money where it'll benefit me.” If so, I implore you to do two things: First, fire your adviser and then seek a therapist to begin your de-programming. Don’t count on Wall Street advisers for this de-programming. Most haven’t been trained to actually invest – that is, to take a stand on what specific investments they like. Besides, the “own a bit of everything” business model is simply too profitable for Wall Street to abandon. As this chart below suggests, folks are paying the Street more than ever. Yet in my mind, they're getting far less value… The Asset Allocation cult that has come to power over the past three decades on Wall Street is, in my mind, the most dangerous threat to people’s wealth. With practically all financial asset prices artificially inflated, this danger has never been greater. The origin of any cult is a premise that is easy to accept. For the Asset Allocators, that premise is that diversification makes sense. From this starting point of “don’t put all your eggs in one basket”, folks have been led down a garden path, where each successive step makes complete logical sense – yet ends up in a dangerous place they never would have logically intended at the outset. People have ended up over-diversifying their life’s savings into hundreds of securities. It’s “diworsification”, as Peter Lynch calls it. If you own 500 stocks and your best idea triples, it contributes less than ½% to your returns. Meanwhile, you remain exposed to the downside of a stock market that is pricey by historic standards. Owning the “market portfolio” has worked for the past 35 years, as all financial asset classes have risen dramatically. In the past five years, much, if not most, of this asset inflation has been artificially orchestrated by central bankers (or central planners, more accurately). That hasn’t worked in China recently, nor has it worked historically anywhere else for any sustainable period. So far, it has continued to work here in the West, though this past week should be a wake-up call. If history is any guide, the odds are high that we too will learn that artificial price controls don’t last – and ultimately do far more harm than good. The future will not be won by asset allocators and closet indexers. My bet is that they’re in a very precarious spot today. Rather, there is a great future ahead for investors who buy shares in great businesses run by great people – but only when available at good prices. Otherwise, there is no place like cash. Too bad that’s advice few advisers have a financial incentive to give you. This is why Fielder’s business model, as an independent fee-only adviser, is the future. People need unbiased, off-the-Street advice today more than ever. Yours in the Field, Frank Byrd, CFA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

With kids heading back to school this week, it’s a good time to reflect on what they’re learning about entrepreneurship. This week a Chinese-American entrepreneur penned an op-ed that really resonated... Amen of the Week: “You’d think that a profit-and-loss forecast would be a bedrock concept for a program teaching people to start their own businesses. You’d be wrong. I’ve mentored graduate students at prestigious universities who couldn’t tell me how they were going to cover things like payroll taxes, workers’ compensation and other basic costs... Too many U.S. business schools are focused on producing future leaders for big corporations and Wall Street firms—not equipping people to venture out on their own. The story is very different in China, where I was born and educated before coming to the U.S. in 1994. Business schools there focus on the basics of running a small business and how to create a profitable company.” - Ken Kuang, founder of Torrey Hills Technology LLC "Teaching Entrepreneurs to Do More than Dream" Wall Street Journal (8/17/2015) Speaking of China, folks are finally beginning to recognize the issues that Fielder has been highlighting to our clients since 2011. This debt-fueled real estate party will end badly. These two images are worth 2,000 words… For an eye-opening example of our Field Research, you can watch a short video here of my real estate tour across five Chinese cities in 2011. Fielder values front-line perspective like this because it gives us the context and conviction necessary to navigate uncertain times. Despite my near-term bearish view on China, I am incredibly bullish long-term (on its people at least). Over the past seven years, I’ve visited a dozen cities there and established many wonderful relationships. It feels like the US must have felt a century ago: messy, volatile, uncertain. Yet, people were determined to make progress one way or another, just like those I’ve met in China. So buckle your seat belts, folks. The ride is likely to get bumpy -- even here. China matters. Just be sure you’re driving in the right direction: toward opportunity, not just away from scary places. Yours in the Field, Frank Byrd, CFA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Amen of the Week: “We all have to fight to maintain our unique style and taste in a world that would have us conform.” - Ralph Lauren Fashion designer There are wise crowds. There are mad crowds. Which one is your money following? Many assume that buying an “efficient” mix of index funds reflects the wisdom of the crowd. I disagree. Owning what academics refer to as the Market Portfolio comes closer to following a mad crowd than a wise crowd. A long history of academic literature has chronicled that crowds, under the proper conditions, can be incredibly wise. One popular example involves a classroom of students guessing the number of jellybeans in a large jar. As it turns out, the average guess comes closer to the precise number of jellybeans than the guess of any individual student.* However, for this experiment to work, certain conditions must hold, including: The students must be diverse, independent (no asking their neighbor’s opinion), decentralized (no committees formed to vote for blocks of students), and have the proper incentives.** Think about it. Is this how modern financial markets operate? Certainly not. Capital is allocated today by institutional investors. Most of this capital is run by white males in their 30’s and 40’s living in two cities (New York and Boston). We graduated from the same few schools, read the same few publications, and dress the same way. Does this sound diverse to you? Further, the structure of the investment management industry is highly centralized. Clients' investment decisions are typically made by advisers, who outsource decisions to portfolio managers, who depend on analysts, who rely on front line sources for their perspective. Does this sound decentralized? Not at all. This ultimately retards independence and warps incentives. Imagine if only a select few students in the classroom were allowed to cast votes for the number of jellybeans. Under that scenario, the crowd’s guess would be inferior. This is why Fielder remains skeptical of the “efficient” portfolios espoused by so many. I have no idea whether financial markets will be higher or lower five years from now. Who wants their life’s savings invested in something with that kind of uncertainty? Not me. Owning “the market”, as I see it, is akin to sheep chasing lemmings over a cliff. Fielder prefers a focused, value-based approach – one that follows a wise crowd, not a mad one. Yours in the Field, Frank Byrd, CFA *Repeating this experiment over time, the crowd decisively beats the guessing skills of even the smartest individual bean-counter in the class. **This list is a combination of conditions espoused by James Surowiecki (The Wisdom of Crowds, 2004) and Scott Page (The Difference, 2007). Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Amen of the Week “…there are certain structural advantages that founders may have that can make their jobs easier than those of non-founder CEOs… The social capital and moral authority that comes from being the founder and having built many of the company’s key products means that on balance people trust you more and give you the benefit of the doubt more when you make tough calls. Fewer people complain and take your time to manage. Fewer people quit and slow your execution. Everything is easier with social capital.” -Mark Zuckerberg, founder and CEO of Facebook (from recent comments to a Facebook post) Founders make the best CEO’s. This may sound like common sense to most of you, yet many MBA types believe just the opposite. Founders make great founders. That much they concede. It is when a company reaches critical mass, they argue, that it’s time to bring in a professional CEO. Suppose you were given the choice of investing a meaningful portion of your life’s savings in one of two companies. One is run by the founder of the business; the other is run by an executive with a strong history of execution. (Assume all else is equal between the companies.) Most of us would likely choose to work for (or invest in) the company run by a founder -- even if he had some warts. We’d choose this over the company run by the professional CEO. Why is this? Instinctively, most of us would believe that the founder would bring something to the table that the professional would not: heart and soul. I believe that people have souls. Companies are merely an association of people, and so by definition, companies have a collective soul. Over time a soul can grow stronger or weaker. It all depends on how it’s nurtured. The founder – who gave birth to the company – is often best equipped to nurture, lead, and inspire the people who comprise the company. The professional CEO, however, is a foster parent. Even with the best of intentions and ultra-smart strategic plans, they often lack that deep connection with employees and customers. Anecdotes abound of great companies that fell on hard times after the founder relinquished the reins to an outsider, only to recover to new heights once the founder stepped back in and retook control. Charles Schwab and Howard Schultz (Starbucks) are two such cases that quickly come to mind. Academic research supports the notion that founders make the best CEO’s, and their stock prices benefit as a result. Rüdiger Fahlenbrach, PhD, has done some of the most interesting work that I’ve found on this subject. His 2009 paper notes that “founder-CEO firms not only have a higher valuation but also better stock market performance, and that they make different investment decisions... Founder-CEO firms invest more in R&D, have higher capital expenditures, and make more focused mergers and acquisitions. An equal-weighted investment strategy that had invested in founder-CEO firms from 1993 to 2002 would have earned a benchmark- adjusted return of 8.3% annually. The excess return is robust; after controlling for a wide variety of firm characteristics, CEO characteristics, and industry affiliation, the abnormal return is still 4.4% annually.” You can find more information on Dr. Fahlenbrach’s paper and some other interesting research here on Fielder’s website. Yours in the Field, Frank Byrd, CFA * Fahlenbrach, Rüdiger. “Founder-Ceos, Investment Decisions, and Stock Market Performance.” 2007 (revised 2009) Disclaimer: To be clear, Fielder does NOT have an opinion on the investment merits of any specific founder-run stocks, including the ones mentioned by name in this report. Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

My grandfather used to repeatedly say, “I’ve never met a rich pessimist.” I believed him until I moved to New York, where rich pessimists abound. Hence, I’ve modified his adage and will one day badger my future grandkids with: “I’ve never met a happy pessimist.” This week I was visiting with a friend who runs a mass-market financial publisher. His role gives him a unique read on the current psyche of the “man in the street”. (He knows what they’re reading and buying.) What, I asked, was the mood of his readers? Are they becoming more positive as the markets and economy appear to be recovering? He said, “Just the opposite. People are terrified.” It’s easy to see why. No one worries more than I do over the ultimate consequences of our deficits, currency debasement, and apparent social degeneration. But I don’t want to turn into an old, grumpy uncle. Who wants to sit next to that guy at Thanksgiving? The other reason for not following the negative crowd is money. The contrarian investor in me wants to find opportunity where others fear to hunt. Even if pessimists are right and danger lurks ahead, so does opportunity for those seeking it. Amidst all the negative noise, there are great people out there building great businesses. We will all do far better for our psyches, not to mention our bank accounts, by focusing our energies on what could go right rather than what can go wrong. My quest is to identify great leaders running great businesses and learn from them. And if possible, invest alongside them. This is why one of Fielder’s strategies is to invest in portfolios of founder-run companies. Over time, owning great things should beget great things. (I’ll probably say this to my grandkids a lot too.) Pessimists prefer to call themselves realists. Yet, a true realist can see the positives too. Granted, the pessimists’ predictions will be right every so often. They’ll win some battles, but they’ll lose the war. I've learned this from personal experience. Trust me, winning battles is over-rated. With this in mind, the following excerpt from Ben Franklin's autobiography made me laugh: Amen of the Week “There are croakers in every country, always boding its ruin. Such a one lived in Philadelphia; a person of note, an elderly man, with a wise look and a very grave manner of speaking; his name was Samuel Mickle. This gentleman, a stranger to me, stopt (sic) one day at my door, and asked me if I was the young man who had lately opened a new printing-home. Being answered in the affirmative, he said he was sorry for me, because it was an expensive undertaking, and the expense would be lost; for Philadelphia was a sinking place, the people already half bankrupts, or near being so; all appearances to the contrary, such as new buildings and the rise of rents, being to his certain knowledge fallacious; for they were, in fact, among the things that would soon ruin us. And he gave me such a detail of misfortunes now existing, or that were soon to exist, that he left me half melancholy. Had I known him before I engaged in this business, probably I never should have done it. This man continued to live in this decaying place, and to declaim in the same strain, refusing for many years to buy a house there, because all was going to destruction; and at last I had the pleasure of seeing him give five times as much for one as he might have bought it for when he first began his croaking.” - Ben Franklin, founder/inventor of many things (from The Autobiography of Ben Franklin) The sad sequel to this tale is Croaker Byrd not buying Brooklyn real estate in 2009. Yours in the Field, Frank Byrd, CFA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Most people understand that bond prices rise when interest rates decline - and vice versa. (If this is news to you, we need to talk.) Most people also understand that as interest rates have been artificially depressed, bond prices have been artificially inflated. Too few, however, seem to appreciate that near-zero interest rates have also inflated stock prices. Even fewer recognize that growth stocks have been the most inflated of all. Why? Because growth stocks’ value is primarily tied to expected cash flows generated very far into the future - just like with a very long-term bond. If you raise the interest rate used to discount these far-away cash flows, the value of the asset declines - perhaps by a lot. Stodgy “value” stocks are less impacted since they generate much more cash in the near term. Chart of the Week As you can see above, growth stocks have significantly outperformed value stocks after the Fed depressed interest rates. Moral of the story: The longer an investment’s time horizon, the more impacted it will be by changes in interest rates. Are you too heavy in long-term investments right at the time that Janet Yellen prepares to lift her heavy foot off of interest rates? Amen of the Week “And the more people believe in efficiency, the bigger the bubbles get.” - Peter Thiel, founder of Pay Pal (from his 2014 book Zero to One) Yours in the Field, Frank Byrd, CFA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

This week I was catching up with a good friend who founded and built a successful lawn care company. He relayed a story that had happened to him earlier that day. While speaking to a customer, he mentioned that he had started his career at Merrill Lynch. This prompted the customer to plead, “My adviser stinks. What advice do you have for how to invest in these crazy markets?” My friend replied, “My advice is don’t ask your lawn guy for investment advice.” With so many “experts” loading up client portfolios with increasingly risky yield assets (just as interest rates hover near historic lows), I’m not so sure that a lawn guy’s advice could be much worse. Chart of the Week The following chart illustrates that nothing is more important than China to the world’s economy … certainly not Greece. Global GDP has grown 17% since 2008, yet backing out China’s 73% growth, the rest of the world’s GDP is still 1% below 2008’s. (And that’s not even accounting for inflation. Wait, I forgot. We haven’t had any of that.) Amen of the Week “Once bad news accumulates, more tends to follow.” “If you own something you think is bad, sell it today because tomorrow it will be worse.” - Ace Greenburg, former Chairman of Bear Stearns The Rise and Fall of Bear Stearns (pp. 142, 196) Yours in the Field, Frank Byrd, CFA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.

Happy 4th! Two of my great-grandparents came over from Ireland and another from Italy. Here's a salute to the outsiders and what they've helped build in this great place that we love. Amen of the Week “Being educated in the United States gave me a good understanding of American culture. I think I got a lot of influence from the entrepreneurial mind in the United States... All human beings are the same. In the United States, people come from all over the world, all races, all backgrounds. And they're all doing what they want, many scoring huge successes. When I saw that, I became more open. It freed my soul.” - Masayoshi Son, founder of SoftBank (now Japan’s wealthiest person) Quoted in the LA Times in 1995 and 1996 Amen to that. Enjoy your 4th weekend! Yours in the Field, Frank Byrd, CFA Disclaimer: While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.