In retrospect, 2021 was clearly a “euphoric” time despite being the height of a pandemic. There is a lot of truth in this statement. It is a cliché that bull markets die on euphoria. As hard as it is to live and work through times like these, typically the world and markets are more rational after these types of systematic resets. It is easy to lose confidence and not speak up during periods of intense stress. I’ve emphasized to younger staff to not let fear get in the way of courage and conviction. It is important to reflect on what is happening and why. While this is painful in the moment, I assert that in five or 10 years we will look back on this as another defining moment. A few years ago, someone told me that 70 percent of portfolio managers had never managed money in a bear market. It has been a roller coaster, to say the least, with a lot of experience gained along the way. But just think of all the crazy things that have happened over the past 30 years. Back then, portfolio managers used to herald lessons learned from the early 70s. I started my investment career in the 90s. This time around, the correction was accelerated by the Federal Reserve aggressively raising interest rates. Both were speculative periods followed by intense corrections. Then and now, asset prices inflated to a point where they created a bubble. Market downturns are all different, but many of them “rhyme.” To me, what we are experiencing now feels very much like 2000. President and Director of Research, Portfolio Manager, Global Growth It is also important to remember that these crises, too, like past crises, shall pass. It’s comforting to know many of our investment professionals have weathered past storms and are able to offer guidance and share their experience with the firm and our clients. Perry Williams points out, downturns are all different, but many of them “rhyme.” As an institution of continuous learning, we hope to learn from these rhymes-to find the patterns that will help us better anticipate and adapt to future crises. While the current downturn will undoubtably provide fresh insights, we have asked some of our portfolio managers to point to lessons learned from past bear markets that have helped guide them through the current market environment. But it has also reminded us not to lose sight of what matters most to us over the long term, which is seeking to find high-quality businesses that offer the capacity to generate sustainable, above-average earnings over five years or more. The experience has caused us to challenge our assumptions and acknowledge our mistakes. It’s been a very difficult year-one that has tested our approach like few others in our 30-year history.
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