You had better hide that statement from your spouse. The market is now weakening faster than expected. What started as a rotation into defensive sectors is beginning to look like a broader correction, and we believe the weakness could continue for several more weeks. If that happens, even some of our highest-conviction stocks may come under further pressure.
A fresh round of US strikes on Iranian targets, followed by missile and drone attacks across the Gulf reignited concerns over the Strait of Hormuz, a critical chokepoint for global oil shipments. Unsurprisingly, oil prices responded swiftly. I also do not care who is going to win the battle.
Do I know where the exact bottom is? No. If I did, life would be much easier. Unfortunately, markets do not come with a timetable. Once this is over, some investors will no doubt point to the exact bottom and say we should have bought there. Hindsight is always very accurate.
My approach has not changed. I’m not trying to catch the exact bottom. I would rather be approximately right than precisely wrong. I will continue to let the market come to me and gradually add to quality stocks as valuations become more attractive.
If markets fall further, we will have more opportunities. If they recover sooner than expected, we will still own businesses we have conviction in. Market corrections are uncomfortable but they are also when future returns are often shaped.