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Quarter-End Insights

Our Outlook for the Market

We're still bullish, even if a recession is under way.

Our stock research is dedicated to understanding the competitive strength of individual firms and the structure and development of their industries. In turn, we develop expectations for free cash flow generation and estimate fair values for individual companies. It's a bottom-up approach to be sure, but we think it can yield valuable top-down insights as well.

Indeed, taking our individual calls together, we still think the market looks cheap. The chart below shows the median ratio of stock price to Morningstar's fair value estimate for our coverage universe since 2001. Lately, we've been at 2001-02 levels--another period that turned out to be a good time to put cash to work by buying stock in risky but productive enterprises.