We have been saying for some time now that we expected markets to become more turbulent and volatile as we are in the midst of a turning point for the US and European economies. On top of that, we also face significant upheaval from the US political environment remaining fluid, the ongoing Brexit negotiations in the UK, and the uncertain geopolitical situation more broadly. Well here we are. Markets oscillate between warnings about rampant interest rate rises and the fears of impending global recession. Stocks, including many in our portfolios, have corrected as investors look to lock in profits by selling what has worked. Given the worries, any company that does not produce results is penalized harshly as if a slight beat or miss of quarterly growth or margins should indicate a flawed investment thesis and a permanent impairment of value.

“It is not the profit margins of the past but those of the future that are basically important to the investor. It is the nature of business that in even the best-run companies unexpected difficulties, profit squeezes, and unfavourable shifts in demand for their products will at times occur.”

Philip Fisher