An Active Approach to Navigate Noisy Markets

Accountability and discipline help surface true signals from abundant information

In today’s market, we believe it’s essential to take an active approach—looking at each company one by one and understanding their unique set of circumstances and conditions.

The current state of the market doesn’t change the type of companies we look for. We focus on our Flywheel conditions, no matter the state of the market. What we’re ultimately trying to do is find companies that can sustain growth with high returns over five years or longer and have the ability to thrive, no matter what’s happening around them.

Emotional regulation is vital. It’s easy to get overly focused on the shorter-term narratives of the market and to become emotionally dysregulated, or impatient. This could set up an investor to make the wrong decision. It’s essential to be able to distinguish the signal from the noise. In our environment today, with such abundant information, it becomes even more challenging.

It’s important to look from the balcony and not just zoom in on what’s right in front of us, what’s going to happen in the next quarter or in the next month. Instead, we think about the companies that will be a lot larger in three to five years’ time than they are today. It’s my job as the leader of our team as a key decision-maker to hold myself and everyone on our team accountable for doing that all the time. As we’re talking to management teams, we make sure to focus our questions on areas that help us understand the strategic direction of these businesses.

The foundation of our research approach is to leverage the team’s strengths, and that comes in many different forms. That comes in cognitive diversity and having different backgrounds. We try to understand different perspectives and think about our blind spots, to cultivate a culture on our team that allows for constructive dialogue. We think over time, that will drive the best decisions for our portfolios.

We need to be open-minded and maintain a very wide lens in how we look at these companies. It’s easy for our lens to change and become too short-term focused, if we don’t constantly remind ourselves of how we win and make sure we’re positioned with those great, long-term opportunities to support great outcomes for our clients.

Important Disclosures

This information is provided for illustrative purposes only. Opinions and views expressed constitute the judgment of Polen Capital as of August 2023 and may involve a number of assumptions and estimates which are not guaranteed and are subject to change without notice or update. Although the information and any opinions or views given have been obtained from or based on sources believed to be reliable, no warranty or representation is made as to their correctness, completeness or accuracy. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice, including any forward-looking estimates or statements which are based on certain expectations and assumptions. The views and strategies described may not be suitable for all clients. This video does not identify all the risks (direct or indirect) or other considerations which might be material to you when entering any financial transaction.

The information in this video has been prepared without taking into account individual objectives, financial situations or needs. It should not be relied upon as a substitute for financial or other specialist advice. This video is provided for informational purposes only and may not be reproduced in any form or transmitted to any person without authorization from Polen Capital Management.

Past performance does not guarantee future results and profitable results cannot be guaranteed.