As value investors, we tend to add the most value when we are being well compensated for the risks we are bearing. This is not one of those times. Global equities, for the most part, are pretty fully valued. While we are still uncovering deeply undervalued equities from time to time and cash reserve levels have receded somewhat in both of our Funds, bargains still remain scarce.
It’s anyone’s guess how long investor confidence can be sustained in the face of advancing asset prices and shrinking risk premiums. For our own and our fellow shareholders’ money, we remain cautious. We are reminded of what our friendly competitor, Howard Marks, said in one of his recent client letters, “risky assets can make good investments if they’re cheap enough. The essential element is knowing when that’s the case. That’s it: the intelligent bearing of risk for profit, the best test for which is a record of repeated success over a long period of time.” We couldn’t agree more.
Read the complete report
It’s anyone’s guess how long investor confidence can be sustained in the face of advancing asset prices and shrinking risk premiums. For our own and our fellow shareholders’ money, we remain cautious. We are reminded of what our friendly competitor, Howard Marks, said in one of his recent client letters, “risky assets can make good investments if they’re cheap enough. The essential element is knowing when that’s the case. That’s it: the intelligent bearing of risk for profit, the best test for which is a record of repeated success over a long period of time.” We couldn’t agree more.
Read the complete report
