Markets have made a strong move higher since mid-June. Since our last issue, both the S&P 500 Index and the small cap Russell 2000 Index each rose about 5% through yesterday's market close. The big news during this period was Brexit, which lopped a little over 5% off of the S&P 500 Index in 2 days late in June. Though it will have significant impact to the UK and Europe, in the end it doesn't materially change our appraisals of company value. In our opinion, most well-managed businesses should actually be able to prosper from the changes ahead. That is an advantage in seeking to invest in a select number of businesses with able management teams vs. buying a broad market index fund or ETF that is forced to own companies run by both the able and, frankly in our view, not-so-able. If you ask the government, inflation hasn't been much of a factor for quite some time, and in fact deflation seems to be on the minds of policymakers. Our observations tell a different story, with evidence of rising inflation all around us. If this is correct, this has ramifications for investors flocking to investments promising price stability and yield. We explore this phenomenon in our essay below.
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John Heldman, CFA
Partner | Portfolio Manager |
Dave Hutchison, CFA
Partner | Portfolio Manager
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