Mackenzie Minute: October 7, 2016
Matt Moody, Portfolio Manager on the Mackenzie Ivy Team, talks about staying focused on increasing value for clients amid the current market noise.
A lot of the market news, especially on the European side, is focused around Deutsche Bank. And, they face a pretty substantial fine and that has led to some concerns around their capital position and the fallout affects potentially on the European financial sector.
Deutsche Bank absolutely matters. They're huge. But, at the end of the day, I have no idea and we don't know what's going to happen and what impact it could have. We're long-term bottom-up investors and we prefer to spend our time analyzing companies and trying to assess their long-term growth prospects rather than trying to figure out what's going to happen in the short-term.
Well, a lot of things could happen, and, a lot of concerns right now are around the U.S. election. But, we're not trying to outguess the market in the short-term. We're trying to build value in the long-term and not get involved in the short-term performance derby. And, sometimes we'll outperform on a short-term basis and often we won't. But, at the end of the day, we're trying to build value carefully for our clients over time. And, we think we can do that by focusing on analyzing businesses rather than getting caught up in short-term noise
Well, the main impact that the market environment has had is on our cash levels, which are elevated and that's not us anticipating a big market decline. It's simply a reflection of our view that valuations are expensive. Like anything, if you go to buy a TV or a pair of jeans and you don't like the price that you see and it's not on sale, you go home unless you're compelled to buy that right away. And so, we choose to go back to the store another day and wait for a better price and that's why our cash is where it is.