Well, we have a deal with the EU. Proof, if it were needed, that whatever one might negotiate, a conclusion will only result once one side makes it clear the timescale for negotiation is not indefinite.
A combination of several Covid-19 vaccines, the EU deal and promises of continued global economic stimulus have encouraged equity investors to cross to the sunny side of the street; the chief beneficiaries being the type of businesses that have borne the brunt of the economic dislocation. The vast majority of these enterprises are, in our view, of marginal quality and worse. Nevertheless, it’s where the money has flowed and it’s a trend that could well continue. If it does so, it is likely the companies we own might ‘underperform’ the major indices.
As long term investors, it is only the possibility of long term underperformance that concentrates our minds. Rising indices, powered by investors buying sub standard merchandise, confers no greater validation than a broken clock does by appearing to be correct, twice a day. If enterprises of substance are to be shunned, it’s a temporary handicap we’ll easily live with.
