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