“I ask everybody to not think in two-to-three-year time frames, but to think in five-to-seven-year time frames.  When somebody … congratulates Amazon on a good quarter … I say thank you. But what I’m thinking to myself is … those quarterly results were actually pretty much fully baked about 3 years ago. Today I’m working on a quarter that is going to happen in 2020. Not next quarter. Next quarter for all practical purposes is done already and it has probably been done for a couple of years.”

Jeff Bezos, 2017

In the middle of October’s turbulent financial markets, on a day when Amazon reported revenue growth of 29% with its cloud computing business AWS growing 46% and its advertising business more than doubling, which we have been advocating as another driver for Amazon’s growth and especially its profitability, yet it is trading off 8% or more on the day because markets were expecting the company’s guidance to be slightly higher than it was, Jeff Bezos’s comment about Amazon’s long-term thinking is a particularly helpful reminder of what matters.  Whether he is working on a quarter three, five or ten years from now, this is how companies grow and prosper over time.

This focus on the long-term is one of the key aspects of the quality we look for in investments.  It is also why our outlook has not changed at all.  As has been said about macro-economics, long-term investing is what we do, markets is what we put up with.  We have no ability of forecasting short-term moves but we have been saying for months that we expect markets to become more volatile as we are in the middle of a turning point for the US and European economies and as we face significant political upheaval with the US midterms, the UK Brexit negotiations and the uncertain geopolitical situation.