November 2023 / VIDEO
3 lessons for an uncertain environment
David Eiswert outlines his rule of 3 for the current environment and how he’s excited about new opportunities emerging
Recorded 27 September 2023.
So the first thing I would say is that if you think about why we're not in a deep recession right now, it's because we didn't have a credit cycle. There is no credit cycle, right. And so keep that in your mind like if you don't have a credit cycle it's hard to have a really bad recession, right. So I think when you think about that, think about if I'm really going to get bearish is this should I buy the dip. There's a lot of great companies in there. Do you have a shopping list or the things you want to buy? Because if we don't get a credit cycle, it's a good time to look, to be looking and see if there's good things to buy. That's what I'm going to do, right? So pay attention to this idea of where we have a credit cycle.
The second thing is that, like, are we on a different equilibrium path, right. So will inflation keep inflation higher than it's been? And do you know how to invest in that environment? Because what I find is that most people haven't really, really most people in their career, if you're sitting here today, right, in 2023, in your career, you've never experienced an environment different than secular stagnation. You're basically hard wired for the Fed to cut. That's why there are like seven cuts priced in the next year, right?
Because everyone's just like, well, I know what will happen. They'll cut and then my portfolio will go up, right? I mean, that's where you're hard wired to think about the world like that. Now step back and say like, what if that's not the world we're in, right? So what if the equilibrium path is different in terms of what we're going to do? We're just going to do the same thing. What's your insight? Send me your model. What's your insight? Send me your model. Show me businesses, show me a quality business where you have an insight about improving returns and I'm not paying too much, just keep doing it and we're going to deliver that set of 75 companies in our portfolio.
And so and then just I, I would say the two things I would say about the portfolio is, this kind of world opens a lot of ideas that we weren't necessarily paying attention to in the last 10 years. And we have a lot of analysts who know those stocks and so they can help me. They say, ‘Dave, for the first time in 10 years, this stock looks like it fits exactly what you say’, right? That idea of doing the same thing, right. When I’m with our clients, I say I really want you to want to pay us and in order for you to want to pay us, I have to be repeatable and I have to be difficult to imitate, right. And so those are the two things that we spend all our time trying, trying to be.
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