A year ago, we wrote that all we wanted for Christmas was a bull market. Thank you, Santa! We thought we had been good but never thought we were that good. The 4th quarter continued the trend that existed all year with markets ending on a strong note. For the first time since 2012, international markets outperformed the US. The weakness of the dollar relative to the Euro and the Yen represented the primary contributor to international’s strength. When viewed from a local market perspective, Japan maintained the same strength as the US while Europe lagged given the lower growth
This is a phrase we heard a lot on our last visit to London. Though repeated as the subway doors open, it brings other ideas to us. Specifically, the gap between the expectations of some investors and what turns out to be the reality. All bubbles eventually “pop” (or at least deflate). Among other issues highlighted in this issue of our newsletter, we ask investors to consider that all assets follow a cycle, but not all assets follow the same cycle; a broader viewpoint may be necessary for distinguishing a cycle’s characteristics.
“The market always does what is least
We like games, but not all games. Some make us tense such as the Hasbro game named Operation. As a child growing up in a warm and nurturing environment, hearing the BUZZ as you touched the side not only scared you, but risked driving you to tears. We believed we could have killed someone if given a plastic scalpel. Jenga is another game that makes us tense. To make it worse, it is not just your actions that could drive to failure. Those players before you place the tower of blocks in an ever more unstable situation. But
The Quarter in Review
The quote used in our 1st quarter report was “It is best to rise from life as from a banquet, neither thirsty nor drunken.” We have been investing in accordance with that quote and maintaining a near fully invested stance yet conscious of the growing optimism witnessed in the world markets.
Global markets, especially equity markets, have continued rising with little performance difference between the major equity classes. Emerging markets have continued their rebound this year and now match, looking back over the past 12 months, the equally impressive performance of smaller US companies. Growth companies have continued
We are strong believers in Peter Lynch’s quote, “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections than has been lost in corrections themselves.” Because fearmongering market pundits profess that a correction is always near, we, therefore, continue to rely on Lynch’s statement.
There is no doubt that headlines these days are bad. North Korea becoming more emboldened in its desire to wreak havoc on the world as they defend their reign. The US government breaking new records for partisanship. Civility becoming second to rage in our own communities as extreme elements take to