Q1 2007 Mid-Quarter Update
The purpose of these investment updates is to give Arrival Capital clients and other interested parties a snapshot of our thinking about the financial markets at a point in time, although always in the context of our overall investment management strategy and the principles that strategy is based on. In other words, we try to see the trees (near term situation) but never want to lose the forest (the big picture of long term wealth creation). Today, coming off a particularly bad day for the markets, it is more important than ever to keep a long term perspective though particularly hard to do so. Net worth went down on February 27th. Hard won gains slipped back, at least on paper. But after a brief bout of frustration, we began surveying the scene for over reactions and long term opportunities. That process continues as the market stabilizes. The name of the game for us continues to be long term wealth creation. The kind that comes from buying good value at good prices. Market turmoil, while trying in the short run, is often a vehicle for creating the opportunities we can seize upon for our clients.

Where are some of today's opportunities? Health care continues to look undervalued, with drugstores and medical testing companies among our favorites. Those twin plays on a developing world, energy and materials, still, after three plus years of growth, continue to look cheap compared with other sectors. Company specific re-structuring stories provide many opportunities as value gets unlocked, particularly for companies that generate plenty of cash and have little debt encumbering the firm.

There are, in short, no shortage of places and themes to explore for sound investments that can be used to create and fine tune well thought out portfolios, diverse enough to weather any short-lived market squall. We want clients to own businesses and wealth creating machines not just stocks that can fluctuate on the whims of short term traders and speculators. The Arrival approach is centered on finding the best value for our clients in the investment marketplace. In a sense we are your personal shopper in the investment store, knowing your personal needs and sense of self. Each investment purchased must not only stand on its own merit but also fit into an investment wardrobe we call a portfolio. Unlike a new suit or pair of shoes, however, the best investments should not use up wealth but create it by virtue of their underlying worth and their capacity to generate cash as ongoing, vibrant businesses. We remain confident in the future and in our ability to navigate the financial markets for our clients and steer their hard earned cash into the best array of investments for their own financial futures.
- posted by Jay @ 1:54 PM