If you've reduced some exposure and raised a little cash, as recommended, there's not much more to do, right? Enjoying the Fourth of July weekend sounds like a good idea. How does one do that after all of this angst, after all the crash-calling, currency movement, equity rebalances and rationalization around Brexit? It can be exhausting at times. We keep coming back, though.
The market is tenuous, but it always is. We remain in unprecedented times. Second-quarter earnings will soon be upon us, and it is certainly going to be a volatile season. Maybe some reassurances are due?
First, almost immediately following the non-binding Brexit decision, a couple of companies reaffirmed 2Q and 2016 guidance. United Technologies (UTX) was one and Whirlpool (WHR) the other. Both signaled that their guidance, likely, reflects the ongoing uncertainties in our global economies. These companies touch our lives everyday with appliances and elevators and air-conditioners and can openers. They are also trading at below-market valuations -- and dominate their end markets with power-house service networks, global reach and innovation.
And what about Monsanto (MON)? Bayer is still wanting the asset, despite a missed quarter and annual earnings expectations almost purposefully suggested to be at our below prior ranges. How interesting. Usually a company trying to tie the knot would put the best and prettiest foot forward. It doesn't want to be sold unless the price is absolutely right. Kudos to the management there.
Anxiety has reared its ugly head here into July, unfortunately. But this no different than any other summer, or spring, or winter or fall. Pockets of strength. Pockets of weakness. Stairs up. Elevators down.
Staying patient is the key. Lose low-conviction investment theses and liquefy. That should be the case all the time. If a position is too big? Reduce the size of it. You'll be happy you did if volatility strikes again.
The companies that we analyze are not lines on a chart. They are organizations, with imperfections, led and operated by human beings. We invest in them to compound earnings and cash flow, and judge their leaders on making the proper decisions.
They get paid to do the right things. And that's how we should approach our investing process.