by Jeffrey Saut, Chief Investment Strategist, Raymond James
I first became aware of Frederick “Shad” Rowe, captain of Dallas-based Greenbrier Partners, by reading his brilliant comments in Forbes magazine decades ago. While Shade no longer writes for Forbes, his stock market insights are available via his monthly letter to the clients in his investment partnership. I always look forward to reading it, and last month’s letter was no exception. Shad actually called me a number of years ago when I began using some of his prose from the old Forbes days, and we have been friends ever since. As a sidebar, he hosted the GIBI Conference (Great Investors Best Ideas) last week where a cast of Wall Street notables spoke. I attended that conference a year ago and had a fabulous time at his dinner the night before the conference for the speakers where we dined with folks like Michael Price, Mario Gabelli, Susan Byrne, David Einhorn, T. Boone Pickens, Gretchen Morgenson, etc. Regrettably, I could not attend this year due to previous commitments, yet I wish I had attended given the speaker lineup; but I digress.
It was Shad that first introduced me to the concept of “Better, Faster, Cheaper.” As he wrote in his September letter:
Our companies are still doing things better, faster, cheaper and for the customer. They have largely vanquished their competition. The biggest threat they face now, however, is political, and politicians are capable of inflicting great business damage. Importantly, unlike the trusts that were busted in the late 19th and early 20th centuries, our businesses are so much more popular with their stakeholders. Here is the question I keep asking myself: "Where are we? In the year 2000 when the dot.com bubble was about to burst and keeping lots of dry powder paid off; or, how about 1455 with the invention of movable type (enabling the printing of the Gutenberg Bible) and the explosion of mankind’s ability to communicate; or, 1820 and the commercialization of the steam engine?" My answer is that this is not a bubble. The period we are currently in represents as significant a leap forward in technology and productivity as the world has ever seen.
Importantly, Shad begins his monthly letter by noting:
Our joyless bull market continues. Many investors I hear from are worried that another bear market is around the corner because on the surface the world has not changed much and it has been nine years since the last bear market. They argue that now is the time to get out of stocks or lighten up. While it might feel good to take money off the table and assume a regression to the mean based upon recent history, seeking comfort has never been the basis of a winning strategy in the stock market. Neither has being a market timer. Meanwhile stocks, in general, have continued to rise.