“Headlines, in a way, are what mislead you because bad news is a headline, and gradual improvement is not.” -Bill Gates, Co-Founder of Microsoft
At FAI, we believe the Bill Gates’ quote above is very enlightening. Every day, we are swamped with negative news headlines regarding political figures, evil doers, military conflicts, and natural disasters. Although much of this news flow can have a devastating effect on a person’s psyche, they rarely impact the world’s condition. Human behavior, world economies, and global markets are interconnected through millions of individuals, all with their own views, opinions, ideas, families and economic circumstances. Most newsworthy events, although disconcerting, have very little impact on these global masses. At FAI, we consistently track this news flow for “nuggets” of true behavior changing information. When we do believe that something in one of these events will cause future changes to the economies or markets of the world, we will certainly react to them by making changes in your portfolio.
What is more important to FAI and the way that we invest, is the gradual improvement /deterioration that we see in our fundamental analysis. One of the things that differentiates us from our competitors is the relentless focus on investment price drivers. We are constantly trying to cut though all of the “noise” represented by the bombardment of news and headlines in an effort to concentrate on the things that matter to security prices. Although we do not have a crystal ball and are not perfect in all of these assessments, we believe that we can increase our probability of success by concentrating on those things that impact market values. Also, our value approach to investing and our diversification strategies provide portfolios with support even when we misjudge an event. In the age of “fake news” and headline sensationalism, we believe it pays to have a clear viewpoint and long-term outlook to investing. Here is a brief list of some of the trends we are watching:
- Low interest rates
- Strong consumer confidence
- Unemployment at historic lows
- Tax reform
- Corporate & consumer balance sheets are solid
- Housing market is weakening
- Consumer spending on goods is weak
- Low inflation and very little wage growth
- Lack of tax reform
- Industrial Production is weak
We will continue to monitor both the headlines and larger economic trends and make changes to the portfolio where appropriate. Thank you for your support of FAI.
Curtis Gross, CFA
Chief Investment Officer