The UK’s June 23 vote to leave the European Union took most market participants by surprise, and volatility is likely to be broad-based in the short term. However, history shows... Read more...
The “Brexit” outcome of the UK referendum took most market participants by surprise.
Against that backdrop, T. Rowe Price provides investors a primer on what happened, what’s next, and why it’s more important than ever to block out the noise and focus on a long-term investment strategy
Given the lack of clarity on what the post-Brexit environment will look like, market volatility is likely to be broad-based in the short term, but it’s important to draw distinctions between this development and the market drops of 2008 and early 2009.
Although volatility is an inevitable part of investing, history demonstrates that markets may reward those who stick to a long-term strategy.
The uneven nature of the outlook will mean that stock selection will become even more crucial, but also stay engaged with... Read more...
One key foundation to investment success in recent years has been the ability to stay engaged with stocks during periods of distressed sentiment in order to benefit from the transition to a better outlook.
We are in a world of dispersed corporate prospects, and shifting sentiment is already providing opportunity as individual stock prices begin to react more aggressively to earnings outcomes and especially earnings disappointment.
We believe that a contrarian stance, backed by a clear understanding of companies’ long-term fundamental prospects, will provide a strong foundation to withstand, as well as profit, from a world of rising volatility.
Selectivity is as always key, however, and in our view should begin with a constant and vigilant approach to understanding the fundamentals of each company you own. A clear understanding of which stocks are best positioned for the next leg of a recovery in cash flow and profitability terms is key at this point in the cycle.
Our approach is to always seek to add to growing businesses at contrarian or controversial entry points, given this remains one of the timeless approaches to investing and can ultimately assist in the delivery of outsized gains.
February 4, 2016
R. Scott Berg, Portfolio Manager, Global Growth Equity Strategy