What do you make of all the uncertainty within and outside the market?

Well a lot is going on at once. It is very extreme in a variety of settings, both in the sort of economic front, the inflation front, the interest rate front, and now we have the war front. We have these multiple factors acting in a negative way. Sentiment has clearly gone negative across the board, but I firmly believe that gradually there will be a diminution of these forces, especially on the inflation front.

I can see mild encouragement on the inflation front and interest rates. I feel comforted that we’re not going to be twice this level. I think that everyone understands what we’re doing, and I think it’s working. The stock market coming down is a behavioral force which will slow down investing purchases in the economy. So oddly, the stock market itself can have a positive influence on inflation.

How do you think investors should view the market?

The most difficult decision an investor has to face is how do they stay in the market. I completely believe that wealth creation through equities is a primary path, and I think the most dangerous thing you can do is get out of the market under the expectation, oh, I’ll get back into the market.

I use the example of COVID a couple years ago when the market actually bottomed 12 days after COVID became officially a big deal disease. So oddly you couldn’t have handled that if you were trying to time it, and if you had gotten out, you really couldn’t have handled it. So I’m very, very firm with the idea of staying involved. Continue whatever form of dollar cost averaging you like and stick with the idea that equities are the single best way to compound wealth in this world.

What recent investment opportunities have you been seeing?

Continue to lean towards value, value in the broadest sense, just less higher multiple. It’s not that we’re ever against growth, but we don’t want to pay extreme multiples. We’re leaning away from growth, especially in our large funds that tend to want to do different types of investing, like Penn Mutual.

I’m personally adding to areas that we’ve had good experience with. Transportation is one of them. We are adding to Forward Air. Landstar, just a superb company, and Air Lease. Air Lease is a leasing company to airlines. They are an extraordinary player. They are top notch, and they had activities in Russia, and they immediately took an impairment charge, which I thought was the absolute best way to handle it. As opposed to discussing it for the next five years, they just said it’s over.

Adaptation is key, you can ask that question to managers all day long. You know, are you good at adapting? Everyone’s going to say yes. I mean you’re never going to get the answer. You only see it through action.

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