Fundamentals, Fundamentals, Fundamentals

By Richard Bernstein, Chief Executive and Chief Investment Officer


Fundamentals, Fundamentals, Fundamentals

We’ve said many times politicians crave the spotlight, but it’s a shame that investors watch the show. History shows quite well that fundamentals, and not politics, ultimately drive the financial markets.

Our November 2014 report, Are you tired of being scared yet?  emphasized that investors were overly concerned about a broad range of issues. We listed nearly 70 risks that at the time led investors to generally conclude that the stock market was an imprudent investment. That was more than two years ago, but such fears have hardly subsided. An old adage on Wall Street is that one should never take investment advice from Washington, DC. The ongoing 9-year (!) bull market proves this seems like sound advice. Investors have been hesitant to invest in this bull market partially because of the warnings of imminent gloom and doom from Washington’s right and left.

Politics vs. Fundamentals

It’s probably fair to say that politics are overwhelming investing fundamentals because it has become difficult to tell the difference between the financial media and traditional news media. Geopolitics, domestic politics, public policy and the like seem to have totally supplanted earnings and sales as investment discussion topics.

For example, few investors realize that the South Korean stock market is up 18% YTD (through 5/4/17 in USD) because they are so apprehensive about the geopolitical news regarding a potential North Korea nuclear threat. We’ve attempted to capitalize on that misjudgment, and have overweighted Korean stocks in many of our portfolios for months, but the typical investor has probably shunned the region’s stocks.


Read more


Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend on or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” intend,” “plan,” “believe,” “estimate” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained in this document are based upon what Purpose Investments [and the portfolio manager] believe to be reasonable assumptions, Purpose Investments [and the portfolio manager] cannot assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on the FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed, that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.

Return to Blog