Kovitz Newsletter 1Q22
But I’m on the outside, I’m looking in ... I can see through you, see your true colors
"Focus on the long run. We say it so much it risks becoming a cliché, but it is – by far – the most important thing we can do for our clients. It is also the most difficult thing to do, especially when that news involves real human tragedy such as the ongoing conflict in Ukraine or the COVID pandemic. Yet, cutting through the news of the day and focusing on what truly helps our clients meet their financial goals is an absolutely essential role we play."
CORE EQUITY COMMENTARY
"One of the less appreciated, but equally important, attributes of successful equity investing flows from the capacity of a portfolio manager to allow capital to compound over a long period of time without unnecessarily interrupting it due to an overreaction to short-term results. As the sheer volume of information available to all has increased, temperament, more so than IQ points, has increased in relative importance as an edge in achieving investment success over time. A certain level of intelligence is necessary, but, above that, the temperament to control the urges that do damage to investment portfolios becomes the most important factor in whether or not you achieve a successful outcome. It is those urges that disrupt the compounding and often doom the undisciplined investor to subpar returns. Financial journalism should really just consist of one story, played over and over – the constant reminder to “Never Interrupt the Compounding”. But who would watch or read that?"
FIXED INCOME COMMENTARY
"The Federal Reserve oversees a critical balancing act setting U.S. monetary policy. The Fed’s mandate is to stabilize prices and maximize employment. If their policy is too restrictive, they risk damaging the economy, causing mass unemployment and deflationary pressures that discourage spending. If their policy is too accommodative, the economy falls victim to outsized inflation with too much money chasing too few goods. Over the last few months, it has become apparent which way the pendulum has swung."