Reconciling volatility and fundamentals
If this year’s crucial interim reporting season tells us anything, it’s that companies change less than their underlying share prices. The challenge is to reconcile the volatility in share prices with fundamental trends in profitability and earnings, which are less variable. Investing to benefit from the compounding and growth of earnings has certainly become a longer-term game, which requires more patience than before. Meanwhile, most companies delivering consistent and reliable growth are fully priced and indeed equity markets are no cheaper than historical averages. The headlines and volatility combined are a negative. What is an investor to do? We've identified four key changes in the investing landscape for value investors. 1) Returns come in a rush. 2) Short sellers have become more powerful. 3) Popular stocks get overpriced. 4) Good execution is the ultimate asset. Read the full article: (VIEW LINK)
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