2019 and Beyond

January 3, 2019 10:45:44 AM

I don’t believe I am going out on a limb when I say that 2018 will be one of those years that most investors will want to forget, and quickly!

After all, seeing the first 20% pullback in the S&P 500 (as well as other indexes), since the financial crisis in 2008, along with the continued and constant negative press we are hearing day in and day out, many would probably say investors have a right to be nervous and uneasy.

But, not me!

Frankly, it’s about time we see a deceleration in valuations in many of the expensive stocks, especially in the handful of stocks that up until October of 2018, contributed to the majority of the S&P 500 and Nasdaq gains. The pullback was warranted and needed. Isn’t this reminiscent of the early 2000s when the hype was focused on having investors buy the S&P 500 index and valuations of a few companies that contributed to the majority of the index gains in 1999?

I will say, we do live in a much different world today compared to 2000. With the huge growth in “program trading” (layman’s terms - computers and algorithms making investing decisions – whatever that means!), along with the continued lack of clarity in what really is happening on a daily basis in mutual funds and in ETFs, it’s no wonder investors would be nervous.

Many have said, and believe the idea that investing “in the stock market” is a gamble. I agree with that statement. But, here’s the thing; you don’t invest “in the stock market”, you invest in businesses that are bought and sold in a market- a “stock market”. Unfortunately, many investors lack any sense of clarity of what they really do own and why – thus creating a backdrop of “gambling”.

From my perspective, the idea of having investment clarity is what allows me to have an abundance of confidence that 2019, just may surprise many investors and we could see not only all of the 20% losses come back, but dare I say, even go higher??? Yup, that is exactly what I am saying.

But, more importantly, for the specific companies our clients own here at Nepsis, my confidence is even higher! Of course, there are no guarantees, and, frankly, if I end up being wrong about how great I believe 2019 will be, my basic fundamental beliefs will remain – Invest in great businesses over time and be grateful for volatility because that is exactly what is needed to take advantage of investing in great businesses over time, on sale!

Lastly, I leave you with one of my all-time favorite and quite often used, Warren Buffett quote – “Be greedy when others are fearful and fearful when others are greedy.”

Invest With Clarity!

PS: Please be on the lookout in the near future for our Quarterly Update including an update on several of the businesses we own.

Mark Pearson

Mark Pearson

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