Time to build robust books.
There will be three components to every investment cycle. The years in every investment cycle can be split like this. We call them the three B’s.
2007 and 2008 were the BOOM years. BAD years always follow the BOOM years. From 2009 through 2012 we have had the BAD years play out. In this phase we saw everything that markets could see. We saw scams, global volatility, commodity crashes, flight to safe havens, volatile global capital flows, heightened risk aversion and much more.
We believe that the transition from the BAD years to the BUILD years has truly begun. The BUILD years are playing out now. The markets will assimilate negativity as business battles adversity. The negativity subsides as the businesses turn adversity into opportunities. The play of events turn to favor the businesses. Commodity prices fall, inflation subsides, interest rates reduce and investor sentiment bottoms out. The BUILD years will always be followed by a BOOM. Investors ignore the BUILD years to their own detriment and realize their passing well after the BOOM has played out. Will it be different this time? We are hopeful.