3 disciplines for a lukewarm market

3 disciplines for a lukewarm market. Does anyone think we are in a lukewarm market? There are just too many bells ringing around us to be comfortable at the moment. Rather than adumbrate the number of small bells ringing which cumulatively add up to market clangs to us, let me focus on what we are doing with your money to keep the boat righted, should there be a market correction. We focus on mid-cycle earnings and have a preference for good businesses that earn above average returns on capital. Whilst we are finding it more difficult to find value in the market, we are focussing on three ways to maintain a reasonable outcome for investors and keep our powder dry for potential opportunities. 1) ensuring our investments earn good cashflows 2) ensuring balance sheets are not overstretched and thus our investee companies are unlikely to be the ones doing emergency capital raisings at half the current share prices (Arrium anyone?); and 3) adhering to valuation disciplines. (VIEW LINK)