Who doesn’t love a sale bargain? If you are like me, knowledge that you paid less than others, is enough to leave you feeling quietly smug about a new purchase, irrespective of if you really needed it! Why then all the upset when the stock market decides to hold a sale?
The opportunity to buy a share of a business at a knock down price should be welcomed by investors, but any feeling of joy is normally overwhelmed by the sense of regret at having not sold what you already own. Any would-be bargain hunter can relate to this, when you discover that your beloved recent purchase is suddenly available for even less than you paid. For most of us it is unrealistic to think that we can have the foresight to accurately “time the market”, but we still succumb to the emotion of regret when stock prices fall.
Four months have now passed since the LF Havelock Global Select fund launched. It was not lost on us that this followed a long period of rising stock prices, with the valuations of many companies resting on brave assumptions for their continued growth. Whilst we do not attempt to time markets, we only invest at prices that do not require undue optimism about a company’s future. A bull market makes bargains harder to come by, but this optimism is never unilateral. With 55,000-or-so publicly listed companies would be shoppers have plenty of choice.
Since October the stock market has been holding an extended end of year sale, based on growing pessimism about the prospects of many companies. In this time the fund held some “dry powder” outside of the stock market, which together with a valuation driven approach, provided us with much comfort. Moving into 2019 the pessimism that has descended on markets gives would-be bargain hunters more choice at their disposal.
Our approach is to estimate what we think a company is worth, by using data about its underlying business. We want to understand how it generates its profits and then use our experience in forecasting to estimate what the future might reasonably hold. These forecasts consider a range of future outcomes, some of which are optimistic and some of which are pessimistic. A scientific approach helps us quantify the likelihood of such events and guard against our judgements being clouded by emotion. Furthermore, using data to understand uncertainty helps us look beyond the short-term. We go into 2019 excited by the opportunity that uncertainty in markets creates for our approach, and wish you a happy, and bargain filled, New Year!
Please ensure you have read this important information. The value of investments in WS Havelock Global Select may fall as well as rise. Investors may not get back the amount they originally invested. Investments will also be affected by currency fluctuations if made from a currency other than the fund’s base currency. Past performance is not a reliable indicator of future results. Potential investors should not use this website as the basis of an investment decision. Decisions to invest in WS Havelock Global Select should be informed only by the fund’s Key Investor Information Document (KIID) and prospectus. Potential investors should carefully consider the risks described in those documents and, if required, consult a financial adviser before deciding to invest. WS Havelock Global Select can invest more than 35% of its value in securities issued or guaranteed by an EEA state listed in the prospectus. The KIID and prospectus are available in English from this website and from Link Fund Solutions.
This website is not intended for any person in the United States. None of Havelock London’s services or related funds is registered under the US Investment Company Act of 1940 or the US Securities Act of 1933. This material is not an offer to sell or solicitation of offers to buy securities or investment services to or from any US person.