2023-3Q Letter to Investors: Avoiding Risk
October 11, 2023: Lofty valuations among most of the so-called “Magnificent Seven” stocks place a heavy demand on future growth for those stocks as a group. If history is a guide, failure to achieve those implied growth rates could leave investors sorely disappointed.
Small Stocks, Big Debt Issues
October 1, 2023: Small stocks have big debt burdens and high borrowing costs and interest expense could rise further as debt is refinanced in the current, higher, interest rate environment. This incremental expense is likely to be a significant headwind for many small cap stocks.
2023-2Q Letter to Investors: Expensive at the Top
June 30, 2023: A strong rally moved market levels markedly higher in the second quarter, leaving any angst of the first quarter’s focus on banking turmoil behind. The rally, however, was driven mostly by handful of the biggest stocks that look increasingly rich relative to the market overall.
Concentration Risk (2023)
May 27, 2023: The largest five stocks in the S&P 500 collectively have increased in value this year by $2.8 trillion, which is 49% above where they began the year. The level of concentration in the S&P 500 as measured by the over-24% total weight of just these five stocks is greater than it has ever been.
2023-1Q Letter to Investors: Crosscurrents from Big Tech & Banks
April 14, 2023: Equity markets rose to start 2023 but experienced crosscurrents from very concentrated gains among a select few of the biggest stocks and weakness in the bank sector. In this environment, our U.S. Fundamental Stability & Value (US FSV) strategy lagged the S&P 500 while comfortably outpacing its value benchmark.
Year-End Letter to Investors: Value Mattered in 2022
January 11, 2023: Elevated inflation and rising rates are likely to cause economic activity to continue to moderate and even possibly contract, but from a longer-term perspective, this is not unusual and the economy and corporations have weathered much more difficult circumstances in the recent past.
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