Mackenzie Minute: April 20, 2018
Portfolio Manager Matt Moody of the Mackenzie Ivy Team talks about investing from the bottom up while volatility increases and technology evolves.
MATT MOODY: One of the most notable events recently is the return of volatility. It’s not actually that volatility recently is unusually high compared to history, but it does follow a period which was actually one of the least volatile periods in the past hundred years. So, it definitely feels more volatile. And volatility, far from being a bad thing, can actually be the friend of a long-term investor, particularly if you do have cash in the portfolio, as several of the Ivy portfolios do. And we haven’t used that cash to any significant extent over the past few months but things are definitely more interesting now than they were just a few months ago.
I cover the European region for the Ivy team and if you look at Europe as an economy it actually had a pretty good year last year, and actually no political blowups as they often do have. But recently you can see the data points sort of come off pretty abruptly, it looks like a slowdown coming, so that is something that we would watch for interest’s sake and it would matter for markets but we are bottom-up investors at the end of the day so what matters much more than that is what happens at the individual company level. There are many changes going on across a wide swath of industries in terms of technology’s impact on how industries work and how companies succeed or don’t. That will be much more impactful for our returns over time so that’s what we spend the bulk of our time looking at.
Technological change can mean heightened volatility in individual stocks, both ones that we own and ones that we would like to own, and that’s because you do see real change at the fundamental level of what is going on with these businesses. But on top of that, you can see significant swings in sentiment. For example, it seems like a company only has to be mentioned in the same paragraph as the word ‘Amazon’ to have a big swing in their share price. And so, in this type of environment, we think it does pay to take a long-term approach with a true bottom-up view to investing and that will prove valuable over time.