Investing in 21st Century Growth Vectors.
We invest in companies that are positioned to grow over the next 10 years and beyond. Growth has 2 layers: 1) Playing the right sport (like not investing in Fossil Fuels) and 2) a differentiated product in that sport. That’s why we’ve narrowed our investment universe to 10 Investment Themes, within which we try to find the best players – companies that have a durable competitive advantage. If a company isn’t growing, it’s dying. That’s the harsh reality of competitive destruction.
The Coronavirus Market Crash has been fast and furious. In fact, it’s been the most furious market crash since the Great Depression of 1929! Is it overstated? Nobody knows. But we had estimated that the 15-20% correction is fair game, given how valuations are likely to be adjusted by anybody in the market who cares about valuation. Beyond that, it’s probably fear inertia. Stocks of the best companies will probably gain it all back, and more, in less than a year. And they keep generating returns in subsequent years. Take a look back at how much some of the most admired companies of today – Apple, Adobe, Microsoft – have gained over the last 10 or 20 years. That’s what our Portfolio is designed to capture: Massive outperformance (over the broader market) in the next few years by investing in the best companies in 21st century Growth Vectors.
But nothing in life moves in a nice, neat, straight line. With great returns comes great volatility. And vice-versa. We’re ready for it because Volatility is not a real risk. It’s an emotional one.
We try to keep our emotions in check.