Business continues as usual
The beginning of 2022 has been a tough start for the market—and it’s not even half over. There’s a laundry list of things to worry about, and prognosticators are tripping over themselves to warn you about how it’s all about to get much worse.
While the companies we own have fallen out of vogue this year, they are doing pretty much what they always do: grow their businesses profitably.
Here’s a chart showing the percentage growth of our companies’ cash profits over the last several years:
By this measure, 2022 is looking good. And it’s a reminder that despite the ups and downs of the market, profit growth can be remarkably consistent.
So what’s changed? How people feel about those profits.
Worries about inflation, recession, and stagflation are driving investors to pay less for the same amount of profits. That’s the fickle part of markets, as just a few short weeks ago investors were willing to pay more for the same amount of corporate profits.
Rather than trying to guess how people will feel next, we take heart in knowing that there are millions of people working every day to make these companies thrive. And they’re doing just that.
As partial owners we’re in the fortunate position of participating in the success of those profitable enterprises, with patience serving as our primary contribution. Our reward is one of the most powerful things in the universe: compounding returns over time.
Dock Street Asset Management, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission. You should not assume that any discussion or information contained in this letter serves as the receipt of, or as a substitute for, personalized investment advice from Dock Street Asset Management, Inc.
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Our comments are an expression of opinion. While we believe our statements to be true, they always depend on the reliability of our own credible sources. Past performance is no guarantee of future returns.