Skip to content
Search

November 2023 / VIDEO

Our response to a changing world

David Eiswert explains how he’s still focused on finding companies with improving returns

Transcript

Recorded 27 September 2023.

Look, I want to own businesses that have improving returns. Like when I talk to my analysts, I say, look, it's really simple what we do. We want to buy quality companies where we have insights about improving returns and we don't pay too much. So go find me insights about improving returns. And they say, does it matter what industry it's in? I'm like, it doesn't matter what industry it's in. 

It can be an energy company, it can be a biotech, it can be a pharma, it can be a bank, it can be a tech company, right. We're not we're not interested in changing our stripes, insights about improving returns. But we can recognise that the world is different, the game is different, right? 

The rules. Someone described investing to me once. It’s like a game of tennis where the rules suddenly change, right. So you go to play tennis and all of a sudden, the court gets wider or gets deeper or, you know, and so the rules are suddenly changing. And really the secret is fastest learner wins, right? The one who figures out how the rules change wins first, right. And really the secret is fastest learner wins, right? The one who figures out how the rules change wins first, right.  

So what we're trying to do now is be a fast learner, right, and say, OK, this environment's changing. There's a, there's a high likelihood that inflation is stickier than people think. There's a low likelihood of a credit event, right, because nobody has any debt that's coming due anytime soon. 

There's no, I mean, again, look, the mortgage rate in the US is almost 8%. House prices are going up every month and you know what? Nobody wants to build a house because the cost of capital is so high, right? So you actually have a supply shortage of housing in the US. 

So actually if you own a house, your assets are going up in price as rates go up, doesn't make any sense, right? So that's this idea that there's a different equilibrium for us. We're going to go around and look at the companies that are going to experience improving returns. 

And so I send the analysts out and I, you know every analyst that works for T. Rowe [Price] all around the world, when they interact with me or my team, we say what's your insights and send us your model, what's your insights and send us your model? That's all we do.  

My insight is industry structure has changed. My insight is this, whatever, this price is going up, my insight is there's a new product. My insight is this government's doing something. My insight is yield curve control, right? So that doesn't change. And so we do that same thing over and over again. 

IMPORTANT INFORMATION

This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date written and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request. It is not intended for distribution to retail investors in any jurisdiction.

Previous Article

November 2023 / VIDEO

Decoding the Fed’s ‘higher for longer’ narrative
Next Article

November 2023 / VIDEO

3 lessons for an uncertain environment
202311-3208641

November 2023 / VIDEO

3 lessons for an uncertain environment

3 lessons for an uncertain environment

3 lessons for an uncertain environment

David Eiswert outlines his rule of 3 for the current environment and how he’s excited...

By David J. Eiswert

David J. Eiswert Portfolio Manager

June 2023 / INVESTMENT INSIGHTS

Global Equities: Everything Changes, So Focus on What Stays the Same

Global Equities: Everything Changes, So Focus on What Stays the Same

Global Equities: Everything Changes, So Focus...

Our investment framework is constantly adapting to the challenges of change

By David J. Eiswert

David J. Eiswert Portfolio Manager