On the plane ride back from an analyst trip I really began to think about the countless events taking place today.
There’s so many items to consider both within and outside of the investment landscape.
As I started to think about topics, I began to jot down some of the topics which are most relevant.
Tariffs
Syria conflicts
China rhetoric
Global re-elections
Russia theories and realities
Oil and OPEC
FED rate hikes? Is is 3 or 2 or 4.
Brexit contuning
Inflation rising?
Earnings season
The list went on and on, but it became clear to me that these are the same talking points we have been talking about for years and in some cases decades. Ironically, I began realizing that these topics and the markets can act analogous to a normal day in Miami or Puerto Rico. Rain clouds are standard occurrences, but by high noon the clouds are gone and the sun is shining once again.
With social media at our finger tips, the world we live in today will continuously provide a topic of the month. The media does a fine job at drawing attention by implanting anxiety and pessimism, which in turn tends to find its way to the markets.
We remind ourselves that throughout periods of uncertainty the market tends to run in herds.
Our goal is not to run with the herd, but to make independent decisions regardless of the herds direction. Academics call it contrarian investing, we call it mindful investing.
Now does this mean that we should not pay attention to topics like the elections, China, and the FED… of course not. But as an alternative way of thinking we suggest focusing on what works and what really matters to investments. We are much more focused on whether Company A is growing revenues, increasing margins, generating cash flows, has a well defined moat, and not over-levered, all while being reasonably valued.
This is our discipline.
We leave you with this. Once again these clouds with pass over, the herd will change direction, and a long term investor won’t look at these occurrences as clouds, but opportunity.
Have a good one!
Sean D. Emory
Avory & Co. Founder & Chief Investment Officer
Disclaimer: This is not a recommendation for purchase or sale of any securities.
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