Q: How do you identify attractive international businesses amid current uncertainties?
Krishna Mohanraj, CFA
The clear message, I would say, for international is this is as good a time as any to be an active investor. Uncertainty is extremely high, and the markets, in aggregate, have had a good run. So that's the time you want to be a stock picker. That's the time you want to be selective. That's not the time to be buying an index and hoping for the best.
So, let's start with the uncertainty first. We have, and this is no secret to anybody, we have massive disruption from technology on one side, and on the other side, we have very consequential political debates. Politically globally, we are, as a world, asking questions about the future of globalization. If you think about it, that's what every election, every headline, every statement or tweet from global who's who, that's what it's saying. What does it mean to be a global citizen when it comes to trade, immigration, climate, regulation -- all seem to be influenced by that. One big question, what does it mean to be a global citizen?
So, the focus has shifted a little bit in 2024, but the uncertainty hasn't. We started 2024 with the usual topics, right? Inflation, central banks, impending political change with the elections, there was a lot of uncertainty going in. Now we are ending 2024. While the election results are out, the landscape has not gotten any clearer. Now, businesses, which obviously we care the most about, the companies are not immune to this. It is not an easy time to run global businesses, and if you don't believe me, just look at the headlines on CNBC: How many high-profile CEOs and CFOs have been fired this year? That's the reality of having to make big capital allocation moves in highly uncertain global markets.
For us, this is all perfect because it's an especially good time to be a stock picker because you're having severe cross-current disruption in many key industries. Political change. That's when you want to be selective and picky in what you want to own. Now, throwing the fact that US markets and the US dollar has had a strong run, it's super attractive now to buy select international franchises at great valuations, especially compared to what we see in the US. So, for us, this is all just a bonanza because we have the luxury of being able to think long-term, and we can take advantage of these bargains.