Welcome to our weekly newsletter, where we summarise the key market developments over the last seven days.
Markets have been contending with difficult headline news for some time now; we’ve seen sharp sell-offs after tariff discussions, Federal Reserve decisions, US payroll data and more. But each and every time, despite the numerous voices calling out a correction, equities have rallied and eventually climbed higher. Smart investors have been using these reactions to market noise to pick up and top up quality companies that they plan to hold for the long term, as we do.
And while we wouldn’t say that we are overly bullish on equities - indeed we are quite cautious in our current allocation – we do think that it is going to take a meaningful deterioration in hard economic data to move equities more than the kind of short, sharp sell-offs that we have seen this year. As it stands global growth is slow but not stagnant, despite the impact of the trade stand-off between the two largest economies in the world.
Our carefully balanced mix of assets is designed to weather a large variety of hard-to-predict market environments, but we also keep enough “dry powder” in our portfolios to be able to take advantage of short term dips that open doors to some of our favoured investments. In just the same way as a rising tide lifts all boats; sell-offs are rarely selective. This means that in periods of severe market stress, even some of the most durable and competitive businesses in the world can suffer in the short term, giving long-term investors the kind of entry points that they are always on the lookout for.
Quote of the week
“The Future is Now”.
“We made a machine three years ago… and now we’ve crossed the Channel, it’s crazy”. French Inventor Franky Zapata
Global growth might be sluggish but French inventor Franky Zapata pushed us one giant leap (or gentle hover) into the future this week by crossing the English Channel on a jet-powered hoverboard of his own design. The journey took a mere twenty minutes, but Zapata was keen to point out that this is a complex piece of machinery and not quite ready for public use; “It’s not a machine for a trip down to the bakery on a Sunday morning” he told one interviewer. The inventor is now said to be working on a flying car.