On our investing worldview:

Thirdly, we remain convicted that our core investment worldview stems from a fundamental value approach. Put simply: we want to own cheap stocks and watch them become less cheap, then we want to sell them. We might have flavors of growth stocks and occasional turnaround story stocks sprinkled throughout portfolios, but value is the emphasis. Additionally, we are steadfast in our commitment to diversification (both within the stock portions of portfolios and across asset classes) as we strive to supply capital preservation and downside protection.

 

On when the market will pull back:

Frankly, we’re not sure. To provide you with a date or time frame with no underlying conviction would be nothing more than a parlor game or side bet. We’re not going to do that. We acknowledge that the market has run for a long time, but we don’t think that necessitates a correction in and of itself. Generally, our team of analysts think the market is on the high end of fair value, but that doesn’t mean we’re in a bubble. We think an adjustment of some kind (maybe it’s 3-5%; maybe it’s 10%) could occur the next 12 months, but we think such a move may present us with buying opportunities and likely won’t represent a repeat of 2008.

 

On day-to-day activity:

For starters, we are trying to avoid an echo chamber of yes-men who constantly agree on all issues. Case in point: this very newsletter underwent multiple revisions to reflect multiple market perspectives. In the pursuit of outside opinions, we are extremely busy with conferences as we seek varying perspectives on the economy, investment opportunities and asset classes. Our five analysts have attended three conferences in October and will attend two more in November. We continue to build upon our existing investment process and pursue independent valuation methods through in-depth analysis of financial statements, management conference calls, analyst reports and other means.  Along those lines, if you ever have interest in a particular stock (be it one in your portfolio or one in the news), feel free to reach out to us. We’re always happy to share our informed opinions through our proprietary research.

 

Our second quarter newsletter can be read in its entirety here.


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