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Holly LaFon
Holly LaFon
Articles (8899)  | Author's Website |

Charles Brandes' 2nd Quarter Letter

Discussion of holdings and market

July 05, 2018 | About:

Dear Clients and Friends,

As the second quarter of 2018 comes to a close, we find ourselves intrigued by the relative complacency we see in the global equity market. This complacency has occurred despite fairly serious geopolitical issues, threats of trade wars and rising interest rates in the United States. Nevertheless, markets are often puzzling, and history shows that it’s folly to try to predict what they will do next.

For over four decades, we at Brandes have focused on business fundamentals when investing on behalf of our clients. We attempt to eliminate market noise when we value businesses and concentrate predominantly on the fundamental drivers of those businesses. We believe that doing this consistently, and seeking to buy undervalued businesses provides us and our clients with the best formula to navigate unpredictable markets that may “dance to their own tunes.”

Therefore, it’s business as usual as we scour the world for companies trading at a discount to our estimates of their true value. Nevertheless, we also keep a close eye on current trends, emerging technologies and evolving global macroeconomics to understand how they might affect the valuations of businesses we consider for investment.

By way of example, the Brandes Institute hosted a summit in April to discuss key issues facing investors. The topics ranged from artificial intelligence to the future of active management to behavioral finance. Joining several of our Brandes colleagues were a number of institutional investors, asset managers, leading-edge academics and “deep-thinkers” on these important topics. The Brandes Institute has summarized the summit discussions in Recap and Review. We welcome your comments and questions.

In these unconventional times, as always, we believe it prudent to emphasize an examination of company fundamentals as our first consideration—even as we assess external factors that can fundamentally change the value of a business (technological advances, competitive dynamics, government policy, etc.). Doing both—focusing on the micro while remaining cognizant of themacro—in a consistent, careful and thoughtful manner is, in our opinion, the best way to navigate the always-intriguing markets.

Regards,


Brandes Investment Partners


The information provided in this material should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any security transactions, holdings or sectors discussed were or will be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance discussed herein. Strategies discussed are subject to change at any time by the investment manager in its discretion due to market conditions or opportunities. The Brandes investment approach tends to result in portfolios that are materially different than their benchmarks with regard to characteristics such as risk, volatility, diversification, and concentration. Market conditions may impact performance. International and emerging markets investing is subject to certain risks such as currency fluctuation and social and political changes; such risks may result in greater share price volatility.

The foregoing reflects the thoughts and opinions of Brandes Investment Partners® exclusively and is subject to change without notice. Brandes Investment Partners® is a registered trademark of Brandes Investment Partners, L.P. in the United States and Canada.

About the author:

Holly LaFon
I'm a financial journalist with a master of science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website


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