Mackenzie Minute: September 21, 2018
Phil Taller, Portfolio Manager, Mackenzie Growth Team, shares his approach to finding opportunities in a disciplined way in a market where enthusiasm has driven growth share prices higher and higher.
One interesting element that's going on this year in the markets are the changes in the way earnings are being valued. On average, earnings are growing, but P/E multiples are contracting and there's a big difference between growth and value; the market is paying increasing multiples for growth and defense, and paying lower and lower multiples for value.
What we keep watching keenly for is growth businesses where opportunities get created. Because there's so much enthusiasm for growth, there's a lot of share prices that are elevated but we keep watching for growth companies where the share price gets hurt on some concerns and we're still trying to avoid being too cyclical so, even though valuations have dropped on the cyclical side, we're trying not to go there too much.
The key challenge for the Fund is to walk a fine line between knowing that the types of businesses we like are being treated very enthusiastically in the markets, so we're trying to be disciplined on price, we're trying not to go too cyclical because of our concerns about the business cycle, but we are finding opportunities in a disciplined way. That's the challenge we're rising to, find those growth businesses, find those defensive opportunities, and keep digging for those. That's what we're really focused on these days.