The stock market closed 2015 with the S&P 500 rising 1.4% and the all-cap Russell 3000 up 0.5% Both indexes were increasingly driven (in our view) by narrow leadership from a handful of high-flying tech stocks. The markets started the new year on a pronounced down note that has continued deep into January. We believe that the irrationality of the market has been on full display in the past several weeks.
This decline in prices was not pleasant by any means. But, in our opinion, for those with an investment versus speculative bent to equities, the decline presented ways to, as the saying goes, make lemonade out of January's lemon crop. It's our opinion that sudden markdowns of stock prices without accompanying reductions in underlying business values are a friend to the long-term investor. We continue to focus on identifying attractive businesses with "owner/operator" managers and seeking to buy them only at a material discount to our estimate of their value.
Regular readers may have noted a change to our monthly commentary format. We welcome your feedback and comments. Please contact us if you have any questions or if you need any additional information.
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John Heldman, CFA
Partner | Portfolio Manager |
Dave Hutchison, CFA
Partner | Portfolio Manager
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