"The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd." - Warren Buffett
Happy New Year!
I spent the past four weeks in Atlanta and New York following up on several diligence efforts, observing an active market that still wants to charge ahead and attending the inaugural UBS Global TMT Conference in New York.
The markets again moved higher in December and much of the move was achieved squarely on the back of overall positive macroeconomic data. The “Phase1” China Trade Deal was certainly the foremost driver of this economic enthusiasm. While the trade deal is far from the agreement we originally envisioned, it is a good start, and it shows that both the U.S. and China have much to gain by cooperating on trade.
The UBS Global TMT Conference which focuses on Telecom, Media and Technology (TMT) companies was a smashing success. I got an opportunity to visit with 30+ public companies and 10+ private companies and hear directly from their senior leadership on topics like 5G, fiber buildout, M&A updates (like ViacomCBS and AT&T) and many other topics. It was a very efficient event where easy access to lots of companies made the event a big success. I have to say, though that by far the most impressive large public company and management team was a surprise to me – Verizon. Chairman and CEO Hans Vestberg has a 5G vision that is impressive and I believe they will run rings around the competition.
In December we saw the S&P 500 close at 3,230 and ended the year up +26.7%. The Dow rose this past month to 28,538 and ended the year up 21.3%.
Nasdaq closed at 8,972.60 and ended the year up 31.5%. The Russell 2000 closed at 1,670 and ended the year up 18.8%.
In January we believe the markets will continue to respond with cautious enthusiasm. The political environment with 2020 campaigns in full swing and the Impeachment trial at the forefront is vexing, to say the least. We read the market’s reaction to these events as being cautiously optimistic that things will work themselves out. While Impeachment was a foregone conclusion last month, it is unlikely that the Senate will convict President Trump and the market reads that as a positive event.
Another data point to consider is Chief Executive Magazine’s latest reading of CEO confidence (where I am a contributor), which shows U.S. business leaders remain optimistic about 2020. They rate their confidence in the business environment as a 6.6 out of 10 – which is considered “good” to “very good”. Solid consumer demand, strong earnings, easy access to capital, low unemployment, and wage growth, CEOs say, add up to an outstanding business climate – one they have not experienced in more than a decade.
Thanks again for your consideration & for sharing your thoughts and ideas with us. Have a wonderful January and 2020 ahead!
Best regards,
Vinnie
Vincent M. Oddo
Managing Partner
PointFour Capital, LLC
vincent.oddo@pointfourcapital.com