We are a few minutes away from the market open and Wall Street is set for a higher open this morning, but all three major indexes closing at new lows for the year on Thursday.
While midterm election years are historically challenging for the markets, the Iran conflict has weighed on US equities the first two weeks of this month, with US markets potentially facing a negative Q1 and maybe investors can look for opportunities.
Overseas, but we will have to wait and see.
Joining me this morning to weigh in is Mohnish Pabrai, the founder and CEO of Pabrai Wagons Advisors.
So good morning.
Thank you so much for joining me.
I know that you focus on company fundamentals, but it is obvious the macro backdrop is weighing on equities right now.
So what are your thoughts on how the macro environment is affecting the broader market right now?
Yeah, I think our, our, uh, fund, uh, really doesn't, uh, look at things, uh, in time frames less than a few years, and, uh, so yeah, and in, in general, uh, market volatility is our friend to the extent that, uh, uh, we're net buyers of stocks and we, uh, we can take advantage of that.
So, um, there's obviously a lot of, uh, significant significant events taking place, uh, in the Middle East, but, uh.
It so far has not affected anything that we are doing in terms of our funds and so on and uh you know, year to date we are up double digits and uh so the fund's really not that correlated with uh what's going on with the broad indices and so on.
And speaking of which, when we take a look at the broader market here in the US, we saw 3 consecutive years of double digit gains, but at the same time, global markets outperformed last year.
So where are you actually seeing the opportunities and what do you focused on right now and why?
Uh, yeah, there's a few different areas that we find opportunities.
The first is, uh, you know, the AI threat, uh, in our opinion, is overblown with a lot of software companies, uh, having their valuations cut.
We, we had uh Adobe CEO resigned yesterday as an example, and they're a growing business at a single digit multiple.
And, uh, so, uh, we see a lot of opportunity with uh constellation software.
Uh, in Canada, and they've got a few related businesses in, in Europe and, uh, and, uh, and the US as well.
And, um, and then we've also got, um.
Uh, investments in the metallurgical coal space and again here you have a kind of supply demand mismatch in the next few years and alpha metallurgical resources in Central Appalachians is, uh, they bought back about a third of their stock in the last 4 years.
So, uh, so there are 3 or 4 themes like that.
And we do have about 60 seconds here since we are edging closer to the market open here on Wall Street.
So when you take a long term view, what do you think is most important for investors out there to keep in mind.
Well, I think the, the holy grail is to find great compounders and to hold on to them over the long term.
And, you know, most of the market returns come from about 3 or 4% of the stocks on the market.
And so it's really important that when you find those in your portfolio that you're not trigger happy and let them do their thing over a long period of time.
OK, Manish, well, we will have to leave it there for today.
Thank you so much for joining us and thank you so much for sharing your insights and your perspective.
Thank you, my pleasure.
