“In the short run the market is a voting machine, but in the long run it is a weighing machine.”
During a period of significant market turbulence, such as the last two months, this observation by Benjamin Graham, the noted American academic and investor, often comes to mind. Our investment approach is focused on ‘weighing’ stocks for the long term. We also believe that there is a disproportionate amount of commentary and news flow discussing and speculating on near-term factors – that is to say, ‘voting’.
Indeed part of our philosophy is to find market inefficiencies in this shorter-term voting, sentiment- driven behaviour and structural dislocations (e.g. quant funds selling due to short-term risk model breaches), and this has made for an active and busy eight weeks as an investment team.