Our clients know that we do not use macro predictions or “big picture themes” to drive our investment decisions. Instead, we base our decisions on fundamental financial information that is objective and measurable. We believe this minimizes human error, helps us recognize valuation extremes, and improves our chances of buying at low prices and selling at higher prices.
Still, we must be vigilant for rare events that change an industry or render financial data less meaningful. We saw this when sweeping regulation changed the profit models of for-profit education stocks. It’s also why we historically tend not to invest in airlines, given the industry’s high fixed costs and lack of pricing power. We risk buying low and selling lower.
Amid the historic drop in oil prices, we thought we’d review the implications for the industry, sovereign nations, and our portfolios...................
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