Kovitz Newsletter 2Q22
Jul 21 2022

And if you close your eyes...Does it
almost feel like you've been here before
How am I gonna be an optimist about this?
How am I gonna be an optimist about this?


"What we strive for at Kovitz – for both ourselves and our clients – is to foster a value- and process-driven approach to investing and financial planning to guide us through tough times. This foundation allows us and our clients to approach periods of market mania and periods of market distress the same way – with clear eyes, a long-term focus on meeting financial goals, and a hint of cautious optimism."

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"As investors, we face the challenge of developing an investment process that insulates us from these destructive psychological forces and, ideally, allows us to exploit the fragilities of other market participants. At Kovitz, we are anchored by an investment philosophy that views investing not as following blips on a computer screen or on your mobile phone, but as becoming a partner in the long-term ownership of a business. Long-term investment success is usually not the result of forecasting next month’s inflation print or predicting how geopolitical events ultimately work out, but by owning small pieces of a collection of financially strong and competitively-advantaged companies. The companies we tend to focus on have above-average financial strength, earn returns on capital employed in the business above their cost of capital, have management teams that understand how to increase intrinsic value per share, and have a long runway to either invest in future growth or return excess cash to shareholders."

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"In the words of Federal Reserve Chairman Jerome Powell, the Fed is “absolutely determined” to bring down inflation. They acted accordingly this quarter. The Fed raised short-term interest rates by 1.25% and unanimously approved a plan to shrink their $9 trillion bond portfolio beginning in June. Given the Fed’s aggressive stance, short-term borrowing costs are expected to climb to over 3% this year, compared to near zero at the start of the year."

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