A New Day
The only sure thing as we pen this month’s Insights is that our comments are likely to be stale by the time they’re published. The unsettling part is that gap is only a few hours!
In times like these, when uncertainty is high, it is possible to have conviction in a few fundamental principles. Most importantly, volatility is the friend of the defensively positioned long-term investor. Though it is never possible to time the bottom, we do believe that forced selling by over-levered market participants will almost always represent a long-term opportunity.
We have little doubt that the quality of investments that cross our desks are about to improve dramatically. Many of those who were scrambling to pay elevated prices just a few weeks ago are now on the sidelines when asset prices are much more attractive (albeit with a need for a selective eye!).
The Gallant MacDonald team has been having many conversations with operators, managers, and clients in recent days and are happy to connect at any point if we can be helpful.
Nobody Knows (Yet Again)
Given that we hosted Howard Marks for an in-person interview last week, we would be remiss if we didn’t include his latest musings in this month’s Insights.
The clarity of thought here is as compelling as always and feels particularly helpful in the current climate.
I’m never sure my answers are right. But, if I can reason out what is most logical I feel I have to move in that direction.
My thoughts on Tariffs, Economic History, and the market Decline
OK, last tariff piece…we promise.
Morgan Housel typically focuses on long-term thinking vs. current events, with this podcast being a rare exception. There is a bit of a history lesson on tariffs, but we include this podcast as Morgan’s thinking aligns very closely with our own.
99% of good investing is doing nothing…1% of good investing is how you behave when others are going crazy.
You don’t need to be a genius, you just need to be merely average when other people are making bad decisions.
Roger Federer Commencement at Dartmouth
A masterclass of a commencement speech from Roger Federer.
This is a story of how difficult it is to make something look easy. Well worth a listen, even if you’ve never picked up a tennis racket.
In tennis, just like in life, not every serve goes our way. What matters is what we do next.
If Equity Markets Didn’t Fall as Much Their Returns Would be Lower
This article is worthy of some reflection given the current state of the markets. The key point is the emphasis on the importance of distinguishing between short-term noise versus events that will alter the trajectory of an economy. Short-term investors’ discomfort with volatility—and resulting poor decisions—are a crucial component of long-run investment success.
These uncertainties combine to create high long run realised and expected returns for equities. If we were absolutely certain that equities would return 10% per year, then they would return a lot less than 10% per year.
Outliers: James Dyson
We close with the riveting topic of vacuum cleaners. No, seriously.
If you don’t know the story of James Dyson, please do yourself a favour and listen to this episode of The Knowledge Project.
Successes teach you nothing. Failures teach you everything. Making mistakes is the most important thing you can do.
Gallant MacDonald is a Private Investment Office serving a select group of ultra-high net worth families who have made significant contributions to business, public service, and philanthropy.
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