4 Topics for Quarterly Investment Letters–September 2015

It’s that time of the quarter again—the time portfolio managers have to come up with topics for their shareholder letters.

This is often a chore, especially for those who take it seriously and want to do a good job. If you’re just going to cover your fund’s performance, that’s not too hard. But if you want to give your readers substantial insights into the markets and your investment strategy, that’s much tougher, especially since you have to do it four times a year.

Good managers often don’t like to comment too much on current events. They can seem as if they’re striving to be pundits or clairvoyants. Just keep in mind that the best letters provide clear and concise insights into the markets, not predictions.

Here are the topics I’d recommend for this quarter:

  1. The Fed’s decision not to raise interest rates. Sure, Bill Gross already beat you to it. But it is an obviously important topic, and even if you don’t manage your portfolio with an eye toward larger economic factors, your clients still want to know your opinions on major economic issues, especially ones that are easily understood and that are widely covered in the media. Your thoughts on interest rates may not provide much insight into your portfolio, but they could help your investors evaluate other holdings.
  2. The fall of the Chinese markets. The tumultuous weeks at the end of August continue to reverberate and stoke fears among U.S. investors in particular. Managers and analyst of international funds simply must address the Chinese crash and explain their perspective on it.
  3. Overvaluation of U.S. stocks. Most managers have probably beat this topic into the ground. Still, it’s never a bad idea to discuss business valuations and the gap between those valuations and stock prices.
  4. The Amazon culture debate. I often encourage my clients to write about books or articles from the business world, especially those written for a broad audience. My sense is that there was not a big bombshell book this past quarter, but there was the now-infamous Amazon article. Part of the fallout from the article was whether such practices were good for the long-term viability for the company. If you’re a buy-and-hold manager, you could write a compelling, incisive letter about whether you think such workplace cultures threaten companies’ values in the long run.

I hope this list helps you generate ideas. Now, get to writing those letters!

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