July 10, 2015 Published by Lindsay Bourkoff

In light of the recent volatility in the markets, the Chinese stock market correction, and the turmoil in Greece, we wanted to convey our current thoughts. Global markets are being tested by macro events right now, but the short-term price volatility in the wake of these events, has little or nothing to do with the intrinsic value of the businesses in which we invest.

Greece’s Economy is Insignificant

With respect to Greece, it is important to note that Greece’s economy is rather insignificant. It is a small country of 11 million people with an economy smaller than the Czech Republict1. Greece’s GDP is 2% of the Eurozone, and 0.33% of the global economy.

Europe is Growing

Aside from Greece, European growth is indeed improving. Eurozone growth estimates have been increased to 1.5% from 0.9%. Cheaper energy, easy monetary policy from the European Central Bank, and a weaker euro are serving to stimulate European growth potential. We believe that there is still more growth ahead for Europe and the global economy.

No Recession Threat in the United States

In the United States, we still do not see the signs of recession and prospects for growth remain good. Recent data from the Bureau of Labor Statistics showed a 280,000 increase in employment in May. Additionally, building permits rose nearly 12% in May and existing home sales had its fastest pace since late 20092.  Housing starts have much room for expansion, and capital investment is still at 50-year lows. All of these variables, among others, represent avenues of future growth potential that we believe can extend the bull market in U.S. Equities.

Volatility May Continue

However, in the short-term, we believe this volatility may continue into the fall. The U.S. markets have been ‘overdue’ for a correction and these corrective periods are a healthy part of a broader bull market.

As value investors, we use times like these to invest in businesses at lower prices. This choppiness will allow us to find opportunities and use our disciplined investment approach to sow the seeds for future prosperity.

As always, please feel free to reach out to us with your thoughts or concerns.




Steve, Zach & Lindsay


1 Data from Oakmark commentary by David Hero, 2Q15, June 30, 2015.

2 Data from Guggenheim Investments, Scott Minerd, June 25, 2015.


The opinions voiced in this material are for general information only. Statements of forecast are not guaranteed to occur, and trends are not guaranteed to continue. All performance referenced is historical and is no guarantee of future results.