What I Took Away from My Vacation

I really needed a restful vacation. Doing nothing for two weeks, except resting, reading, spending quality time with family, and reflecting.

Here are a few takeaways from this vacation.

There is a world of difference between daily news and what truly matters. There is no direction in day-to-day events, whether it concerns the war in Iran, the situation with tariffs, or U.S. politics. It may be Mr. Trump’s strategy to keep the entire planet on edge. In any case, daily news and stock market movements are just noise that any long-term investor must ignore (or at the very least, not allow to deviate from their investment philosophy). We are playing the “long game,” and what matters is investing for the long term in companies that will stand the test of time and create value for their shareholders over the next ten or twenty years.

Moreover, there is sometimes a wide gap between daily stock price movements and the intrinsic value of businesses. In the short term, many factors can influence the share price of companies in a portfolio: oil prices, interest rates, tariffs, economic data, etc. Fads and speculative movements also impact prices in the short term. However, in the medium and long term, it is companies’ net earnings that will determine their value, and nothing else. Most of the time, prices and the value of companies in the stock market are roughly aligned; sometimes, they can disconnect significantly, on either side. I believe we are living through one of those periods for many companies today. As such, it is often a mistake to be influenced by short-term movements in stock prices; it is better to focus on our estimate of their intrinsic value and on the long-term growth prospects of the companies in our portfolio.

I wanted, for two weeks, to disconnect from the world of the stock market and investing, but it was a lost cause. I might as well admit it—I love investing and running a business, and there is no point in trying to stop thinking about it; it is part of who I am. To paraphrase a popular quote, you can take the investor out of the market, but you cannot take the market out of the investor!

I once again realized that reading is by far the best thing to do to learn and improve. I read about a dozen books during my vacation, including a few novels (I loved the historical novel The Winter Warriors by Olivier Norek (★★★★★) and the new book by Michael Connelly, The Proving Ground (★★★★), which immerses us in the world of AI and its potential pitfalls, biographies (The Price of Peace by Zachary D. Carter, about the life of John Maynard Keynes), and a few finance books, including The Compounders by Oddbjorn Dybvad, Kjetil Nyland, and Adnan Hadziefendic (★★★). I also took the time to read a few annual letters from CEOs to their shareholders, including those of Markel and Berkshire Hathaway, which are always very insightful. While we are all obsessed with our “smart” phones, books and reading remain, in my view, the best way to learn (and to be entertained).

Final takeaway: vacations are essential and are an integral part of the productivity and performance of any employee. Not taking vacations does not lead to greater productivity.

I return refreshed and even more focused on the long-term horizon.

Philippe Le Blanc, CFA, MBA 
Chief Investment Officer at COTE 100