Q:  What is your financial philosophy?

A: We are active, global managers who focus on investing in long-term global trends or “Global Super-Cycles.” We also have active risk management “defensive investment strategies” that take us out of any global stock market during their bear markets or recessions.

We are guided by many academic studies, which show that a globally diversified portfolio is safer, less risky and more diversified than just investing in the U.S.

Given the problems in financial reporting in many emerging markets, our basic investment philosophy is based on the belief that by tracking and investing in “Global Super-Cycles” the fund stays invested in these long-term global investment trends that are outperforming global markets.

Again, because of questionable financial reporting in all markets, including the US (i.e. US sub-prime banking crisis reporting) our basic investment philosophy is based on the belief that it is more important to get the long-term stock market and industry trends right than individual company fundamentals such as multiples of earnings or sales or book value.

Two University of Chicago studies found that whether a stock goes up or down is about 50% related to the overall direction of the market itself; 30% to the sector or industry market direction; and only 20% was related to fundamentals. One of those studies also indicated that longterm stock market and industry trends tended to persist and to last between 18 months to 4 years, with real estate and commodity cycles lasting longer.

For example, technology and telecommunications were the two major global trends from 1997 to the beginning of 2000. Sectors like bonds, real estate and commodity hard assets did very well during the 2000 - 2002 bear market and recession. Real estate and hard asset trends also lasted well into the recovery. Since 2003, major trends have been largely in commodities, oil, gold, energy, and Asia and emerging markets. Had you held a diversified portfolio of these “Global Super- Cycle” trend investments while they were in upward trends and sold them when the trends ended, your investments would have made a lot of money.

We may now be going through another super-cycle transition, since it seems we are now entering another bear market and possibly a recession. I think you will again see bonds, utilities, energy, gold and soft commodities like agriculture emerge as the new “Global Super-Cycles.”

In all this, the bottom line is, if the overall market and the industry sector for your investments are going up, chances are your stocks or your funds are going up, too.

Q:  Given this investment philosophy, what is your strategy?

A: We are currently in the process of changing the name of this fund from the SHEPHERD LARGE CAP GROWTH FUND to the FOXHALL SHEPHERD GLOBAL FUND.

Our strategy is to identify major global regional, sector and industry trends that we call “Global Super-Cycles” and then create a diversified portfolio that overweights these “Global Super-Cycle” investments.

We use a proprietary relative strength methodology to determine which global regions, sectors and industries are outperforming the S & P 500 Index. The basis for this methodology was developed some years ago at the University of Chicago. Over time, my Co-Chief Investment Officer, David Morton and I have refined the methodology and incorporated several other long-term relative strength studies. Without going into all the details, we basically calculate a weighted average over a one-year period of time and measure the relative strength of various global regions and sectors and we then try to overweight those sectors and industries that are both outperforming the S&P 500 Index and a money market fund. If it is not outperforming cash, I don’t want to own the investment.

An important part of our risk management strategy is that we always include money market funds (cash) and bonds in our investment universe. So if global markets or a regional market is going into a bear market or recession, our Foxhall Capital methodology would identify cash, bonds and possibly gold as the investments that are primarily outperforming the S&P 500 Index and our money market fund indicator. This means, that at some times, we can move our entire portfolio into bonds, cash, gold or other defensive investments. This is how our defensive investment strategy is implemented in our portfolios.

I view my role similar to that of a football coach. To win a football game a coach must have both a great offensive team and a great defensive team. Since the stock market is volatile, when the stock market is broadly going up I need to have an offensive investment strategy, which means I need to be in the market, fully invested. During a bear market or recession, however, the strategy should be to move into defensive asset classes and investments. Therefore, in a nutshell, our strategy is that we’re global investors who follow long-term “Global Super-Cycle” trends by using relative strength as our methodology and we don’t hesitate to move into defensive investments when any global market is going into a bear market or recession.

Q:  How is your research process organized, given that Global investing involves looking at different countries and investment cycles?

A: As mentioned above, we invest in and track long term “Global Super-Cycles” trends that are outperforming global markets. We are really looking for and focusing on BIG and SUSTAINABLE global trends. We invest in large global companies and broad exchange traded funds (ETFs) that are liquid enough to trade and provide us with broad diversification.

I travel widely around the world and as a former international attorney who has represented the World Bank and major companies and governments throughout the former Soviet Union and in many Asian and emerging markets. Over the decades I have developed a large network of global industry analysts and contacts that I leverage to further my understanding of these global and industry trends.

Besides using our proprietary Foxhall Capital quantitative relative strength methodology explained above, I also gather global trend information from newspapers and the research departments of major brokerage firms worldwide. I have internet subscriptions to almost every major business newspaper or publication published in Asia and other emerging markets. I also read (or at least skim through) hundreds of pages of research material sent to me daily by global research and government analysts through out the world.

I also believe that US companies that have a strong global emphasis will actually be the major beneficiaries of the global economic expansion currently going on in China, India and the rest of Asia and emerging markets. These global US companies are coming to dominate many of their industry sectors in these growing emerging markets. These US companies are very important players in these growing markets and will make a lot of money for their shareholders in the future.