Long term investing through short term worries
The 60 days since March 30 have been spectacularly good for the stock market and Dock Street portfolios. However, if we look further back to November 1st, 2025, the results are less than inspiring. Yes, we’ve made money, but our portfolios have trailed or just tied the S&P 500 since that date.
How should clients judge the performance of their portfolios? We have never promised a smooth path up and to the right for client balances. In fact, while our results have been favorable over time, there have been extended periods when clients can reasonably ask, “Is something wrong with my portfolio?”
Long term answer: “No.”
But here are a few things that went wrong since last fall:
- Many investors worried that Artificial Intelligence would prove to be unprofitable or worse.
- Then Artificial Intelligence made software easier to create–many investors panicked out of software stocks, assuming the worst.
- Then there was the War.
Right or wrong, the market has clearly decided that the ceasefire announced on March 31 took care of the War on a long term basis.
With war out of the way (for the market at least), investors woke up to just how much earnings growth had accelerated in the first part of the year. Of course, since we at Dock Street never take our eye off the profits generated by our portfolio companies, this hugely positive news didn’t surprise us.
Stock prices do rhyme with earnings growth over time, but for several months at a time they can diverge. In the case of the recent November to April period, worries from the list above caused stock prices of many of our portfolio companies to weaken even as the underlying businesses got stronger.
As Evan McGoff recently said, “The stock isn’t the business.” But the stock price is the most visible data point.
So short term, the stock market is driven by emotion, producing the bumpy ride referenced above. Longer term, it is driven by the economic performance of individual companies. That’s our focus at Dock Street. What we see is a future brimming with opportunity.
Best regards,
Daniel A. Ogden
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.
It is published solely for informational purposes and is not to be construed as a solicitation nor does it constitute advice, investment or otherwise.
To the extent that a reader has questions regarding the applicability of any specific issue discussed above to their individual situation, they are encouraged to consult with the professional advisor of their choosing.
A copy of our Form ADV Part II regarding our advisory services and fees is available upon request.
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.
