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Happy Thanksgiving everyone. We hope you all get a chance to break from your daily routines and reunite with family and friends over the holiday. It’s such a wonderful holiday. It gives us all a chance to focus on the many positives in our lives and to give thanks. It’s far too easy in today’s 24/7 cable news world to only see the negatives. We would like to give thanks to each and every one of you for taking the time to read our thoughts about markets and life. We truly treasure and give thanks for the opportunity to know and have a relationship with each of you. The word most commonly associated with Thanksgiving is Turkey. For whatever reason, Turkeys are often referred to as the dumbest animal on earth. It’s not clear why they are considered so dim-witted. It seems to have something to do with their clumsy walk and having eyes that stare off into the distance, in different directions, for long periods of time. Many awards for poor quality and dim-witted movies, books, athletes, actors, etc. are named after turkeys. The Golden Turkey award is given in Hollywood for the worst movies, directors, writers, and producers. Last year’s winner (loser) for worst movie was Baywatch. While we didn’t have the privilege of seeing this movie, we nevertheless will agree. We want to give out our own Golden Turkey awards for worst performing assets of 2018. I know, we said we are going to focus on the positive, so here are the markets that we are thankful we didn’t invest in. (See how we did that?) China - China is down more than 20% YTD. While the chaotic trade dispute between the U.S. and China is causing volatility and lower markets here in the United States, for the Chinese it’s far worse. As an export dependent economy, trade is essential for economic growth. Gold – Gold has lost 6.5% YTD. It’s negative over the last 5 years. It’s never made sense, it never will. We are thankful we don’t have an eye for things that glitter. Oil – While only down slightly on the year, oil is down 21% over the last month, and over 80% from its high 10 years ago. Remember peak oil? It was all supposed to be gone by now. Due to fracking and other innovative techniques to extract oil, oil reserves are higher today than at any time in history. It really is black gold, at least it performs like it. Long Term Treasury Bonds – Down 7.5% YTD. While considered risk free, risk free means the government won’t default. It does not mean interest rates won’t rise and cost long term treasury holders a lot of money. Bitcoin – Down 63% YTD. We want to feel bad for bitcoin investors, we really do. We just can’t. We are thankful that greed didn’t win us over and fool us into seeing value in a worthless fiat currency that is not backed by any form of government. International Stocks – While we maintain a small strategic allocation to international stocks, we are thankful to be materially underweight what is considered to be the standard weighting of international stocks. YTD, European markets are down on average 13% and Asian markets are down 10% on average. It’s been a tough year out there. Unlike 2017 where it was hard not to make money, 2018 has proven a very hard year to make money. There are only 2 major asset classes that have positive returns on the year. The runner up is cash at about 1%. The winner is………. wait for it………. U.S. Stocks! It certainly doesn’t feel that way but believe it or not the top place to have invested so far in 2018 is U.S. Stocks. The S&P 500 is up 3%, and the Nasdaq is up 6%. Despite the volatility, we are thankful for U.S. Stocks. Years like 2018 test investors. At different points during the year investors are elated and at others points they are deflated. Markets swing up and down and give even the most seasoned investors a nervous feeling. We believe successful long-term investing is about avoiding large loses, not winning big in the short-term by over allocating to any one asset. Proper diversification allows investors to win mathematically (through efficient compounding) and behaviorally, by sticking to their long-term plan. Our process is designed to give investors a diversified portfolio that will appreciate in value over the longer term. We are most proud (and thankful) of limiting investor downside and helping them avoid large short-term losses. This helps investors stick to their long-term plan. We were discussing some of our client reviews this year. During January and September, we were often asked why we didn’t have more money allocated to stocks. During February and April, we were often asked why we didn’t less money allocated to stocks. These are great questions. Here’s the answer; over the short-term, our frameworks explain roughly 20% of market movements. Inversely this means we can’t explain 80% of why a market does what it does on a short-term basis. When we expand our forecasting horizon to 3 years we can explain about 40% of the variance. At 5 years we can explain 60%. The uncertainty of short-term market movements is why we diversify. The longer the investment horizon, the more confident investors can be that they will achieve their investment goals. As always, the challenge is sticking to the plan. Have a Wonderful Thanksgiving, The GreenPort Team

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