Our goal for Investment Perspectives is for it to be one of the ways that we communicate our thinking (past and present) to clients and the general public. We believe that investing is an iterative process and we know of no better way to test our own thinking than to share it with others. We encourage readers to send us their thoughts or questions.
Latest Investment Perspectives
“Enduring great companies preserve their core values and purpose while their business strategies and operating practices endlessly adapt to a changing world.”
– Jim Collins, Good to Great
Speculation, Inflation, and AI Valuation
As the first half of 2025 drew to a close, markets pivoted sharply from last year’s “quality comeback” to a full-throttle embrace of speculation. An abrupt rally from the April 8 low catapulted the most unprofitable companies to significant gains, more than double the return of profitable peers, and pushed high-beta[1], story-driven names such as Tesla to eye-watering valuation multiples. At the same time, Washington’s policy mix turned decisively inflationary: higher across-the-board tariffs, tighter immigration rules, and a fresh dose of fiscal stimulus have together rekindled price-pressure risks just as the Federal Reserve nears the limits of its soft-landing playbook. Intensifying these crosscurrents is the investor stampede into artificial intelligence; while the technology’s long-term promise is undeniable, valuations in the sector increasingly echo late-1990s exuberance, even as many headline AI firms struggle to convert massive R&D outlays into cash flow.
Against that backdrop, this quarter’s Investment Perspectives examines three forces we believe will define market dynamics in the year ahead: the market’s renewed “risk-on” appetite and what history tells us about its shelf life; policy-driven inflation and why businesses with durable pricing power and capital-light models are the best guardians of real wealth; and the difference between chasing AI hype and owning the indispensable infrastructure that will power the technology’s eventual winners. As always, our focus remains on companies with wide economic moats, strong balance sheets, and management teams that allocate capital with discipline. Amid headline volatility and narrative-driven swings, patience, selectivity, and an unwavering commitment to fundamental value remain our most reliable tools for protecting and compounding your capital.