It is not a stock market; it is a market of stocks. In July 2006, growth stocks started leading the parade, but as easy as that looks, a growth investor would have been back in the dog house during certain periods. It is pretty obvious as well that large-cap sotcks were in the lead until that peak in 2007. Since then, the bigger you are, the harder you fall. As a portfolio manager, not only do you have to be cognizant of the trend of the market, but you also have to be in the right part of the market. You can see these trends in the chart below.
The bond market weakness (rise in rates) is being totally misinterpreted in our opinion. The rates on bonds were artificially too low, and as confidence returns, you are seeing them return to normal. Obviously, if you look at the trends of just the last two years, it looks distrubing. But if you put it in the perspective of the longer-term period, it looks much more like "returning to normal."
Short-term trends come and go, but for long-term investors, you have to stay true to your discipline. And today, our discipline says to remain very bullish.
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