Global View Investment Blog

Don't Be Surprised

Most investors simply don’t understand that stock market indexes most investors track are market capitalization weighted.  This means that they disproportionately represent companies that have gone up in price instead of companies that have better fundamentals’.  And since the indexes are rebalanced based on higher prices, in effect these indexes are momentum investment strategies.  Momentum investment strategies always do the best during good markets and worst doing bad markets.   

Essential to our way of looking at the world is to preserve against the permanent loss of capital, or to lose money we can’t make back.  With that in mind, we strongly favor the approach Steve Romick takes with his strategy to that of pursuing returns in overvalued market indexes.  While we can’t predict a market collapse, we can plan for a period of low returns where fundamentals will matter again. 

FPA Crescent Fund vs. S&P 500 1988-1999

Link to FPA Performance Report


Ken Moore

Written by Ken Moore

Ken’s focus is on investment strategy, research and analysis as well as financial planning strategy. Ken plays the lead role of our team identifying investments that fit the philosophy of the Global View approach. He is a strict adherent to Margin of Safety investment principles and has a strong belief in the power of business cycles. On a personal note, Ken was born in 1964 in Lexington Virginia, has been married since 1991. Immediately before locating to Greenville in 1997, Ken lived in New York City.

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