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Looking Forward

Looking Forward – December 2021

Causes for concern, no doubt. They change in form and scale as time passes, but they are ever-present. While they warrant investor attention, we believe such matters should only evolve into influences on stock prices to the degree that they impact individual-company fundamentals. We are glad to see the broader investment community appeared to share that think¬ing in 2021, and we believe there is reason that market mindset could persist in 2022.

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Looking Forward – September 2021

From long-term historical patterns to market-moving events of the day, some investors cannot resist looking for an angle to outsmart the rest of us. More power to them – competing ideas and interests contribute to the inefficiencies that active managers like us look to exploit.

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Looking Forward – June 2021

We continue to gain insight into lingering supply issues and progress in addressing them, and we remain vigilant regarding pricing pressure and its impact on individual-company fundamentals. Perhaps investors acting in the same way are responsible for recent activity in the broader market. We don’t know, which is why our outlook doesn’t hinge on whether investor sentiment serves as an accurate assessment of the market’s risk-reward profile.

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Looking Forward – March 2021

For the record, we hope we’re on the verge of normal and that any recently relaxed restrictions prove to be well-founded harbingers of more to come. Still, no matter how positive things appear in aggregate, we recognize that we can’t relax when it comes to potential risks, which in addition to potential for a Covid-19 setback include elevated valuations. Those valuations reflect high expectations, leaving little room for error.

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Looking Forward – December 2020

Disrupted commerce. Strained transnational relationships. Political disarray atop the world’s largest economy. The reasons for despair seemed to outnumber fingers on which to count them in 2020, yet Wall Street, after a brief period of shock, propelled major market indexes to record highs. The history of this market will read like fiction to future generations.

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Looking Forward – September 2020

The hobbled economic outlook leaves the supply of companies with near-term earnings promise lower than levels we might expect in an environment unrestrained by a global health crisis. Still, there is by no means a shortage. From companies capitalizing on unshakable secular trends to others overcoming newly presented challenges, we continue to find an ample supply of companies that we believe are poised to deliver robust earnings growth as we move into the final quarter of the year.

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Looking Forward – June 2020

In aggregate, it was an overwhelmingly positive period for stock prices as spring expired into summer, with most major indexes posting double-digit gains. It turned out to be the best quarter since the final three months of 1998. Still, investors showed that they reserve the right to diametrically change their minds at any given moment.

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Looking Forward – March 2020

One of the main advantages of being in business for the better part of five decades is experience.  Granted, there’s nothing fun about time spent experiencing the downside of a crisis, but there’s no discounting the value of the lessons learned while weathering it.  Investing for growth is a long-term pursuit, one that requires perspective seasoned over time.

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Looking Forward – December 2019

With billions of shares bought and sold each day, ascribing one statement as responsible for a day’s trading in the stock market is, to put it mildly, an oversimplification. Someone sold shares in a mutual fund held in a 529 plan to raise money to pay college tuition for his daughter’s spring semester. Someone else accumulated shares in a company that she believes represents a likely acquisition target. Neither investor paid the president’s trade comments much mind.

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Looking Forward – September 2019

Conflicting signals. Volatility, for reasons ranging from lingering to topical, is on the rise. As we embark on the final quarter of 2019, now seems an appropriate time to recall Mark Twain’s 19th century observation about October: “This is one of the peculiarly dangerous months to speculate in stocks.”

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Looking Forward – June 2019

The Consumer Confidence Index increased more than 10 percent from its January reading through its high in May. At the same time, exposure to the consumer discretionary sector among the portfolios we manage decreased by one-fourth. We’re comfortable with the divergence. Consumer confidence is an important indicator in an economy primarily driven by domestic consumption, but, by itself, it doesn’t influence a single investment decision that we make.

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Looking Forward – March 2019

The theory is that stock buybacks, by boosting earnings per share among companies that execute them, can lift share prices as the pool of outstanding shares shrinks. Considering last year’s nosebleed levels and the since-passed anniversary of the tax cuts that helped juice their rise, predicting an impending loss of buyback steam seems like a reasonable prognostication once again. So, trouble lurks, right?

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