The World is at an Inflection Point

With the presidential election less than one month away and a possible interest rate hike by the Federal Reserve before year end, investors should expect volatility to be with us following a fairly quiet few months. Our portfolio strategy continues to focus on three areas of emphasis – high-quality growth, high-quality dividend payers and opportunistic investments. Our focus remains on selecting companies benefiting from positive trends in cloud computing and mobility, changes in the healthcare industry, rising defense spending, increasing U.S. consumer spending and the shift to a more service-oriented global economy led by China and India. We continue to target companies that are gaining market share, maintaining or improving profit margins, increasing free cash flow, restructuring to gain more efficiency, increasing pricing power and growing dividends. Companies that are able to more aggressively invest in the future growth of their businesses will be more highly rewarded. This is an environment that will continue to reward companies with strong, qualitative fundamentals. 

The United States remains the leading nation from a geopolitical and economic perspective, and the collective strengths of the nation should help keep the U.S. in that position. However, we are at an inflection point and now is the time for political ideology to be put aside and to get on with fixing the areas that need fixing. Tax reform, infrastructure, education, job creation, health care and entitlement programs, including state and local pension plans and inequality need to be addressed immediately. The current record low interest-rate environment has been giving governments, home and abroad, a unique opportunity use low-cost debt to make the needed investments essential to foster a return to a stronger growth environment. The opportunity will not be with us forever and now is the time to capitalize on this historic interest rate structure. Importantly for investors, if this inflection point results in our addressing our needs through the implementation of smart fiscal policy and the structural reforms mentioned above, the outlook for the United States economy becomes materially better.