Quarterly Review & Outlook-3rd Quarter 2019

The best teammates are the ones I have to think about the least.

-Tom Brady

Not long ago computers were sold on processor speed, and car companies talked about torque and drivetrain. Companies actually made things, and they showed you how their things were better than everybody else’s things. Now, if you happen upon a commercial, technical specifications have been replaced by something less tangible—good vibes. Companies are no longer selling a product, they are selling a lifestyle.

The shift came in part because we got really good at making things. Steve Jobs rebuilt Apple around the “It Just Works” ethos, but this sentiment was not exclusive to Apple. Affordable quality is everywhere now. There is still plenty to consider when choosing a new car, but reliability is further down the list than ever before.

A well-designed, balanced portfolio just works. It is resilient to breaking news on Twitter, or the latest election polls. It has stuff that works in a good economy and a bad economy, through inflation or deflation. A highly concentrated portfolio, on the other hand, is exciting but unreliable. News always matters, and the risk of large permanent loss of capital resulting from a single headline never goes away.

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