Stock markets around the world experienced heightened volatility during the second quarter—punctuated by the unexpected referendum vote result on June 24th by British citizens to leave the European Union. Commonly referred to as the “Brexit”, stock prices were particularly weak in the aftermath of the vote. Worldwide stock indices fell between five and 10 percent on the two business days after the vote. The decline in the stock markets underlined a fear associated with the “Brexit” vote and whether it represents a worldwide tidal shift in the view of individuals and governments favoring protectionist economic policies over free trade. Despite the increased volatility of stock markets, our two core investment strategies posted small gains during the quarter. Our Intrinsic Value Equity Strategy posted better gains than comparable indices while our Dividend Growth & Income Strategy, which had posted very strong gains over the previous four quarters, lagged the broader market indices.

Many investors and market pundits are trying to ascertain how the “Brexit” vote will impact future economic growth, future stock market performance and the management of portfolios. We feel it is nearly impossible to measure the potential impact of the changing attitudes of individuals and governments towards trade and economic policies. We feel more comfortable focusing on more quantifiable measures like the quality of the businesses we own and the underlying estimated intrinsic value of these companies compared to their stock prices. Much of successful investing requires staying within ones “circle of competence”, focusing on what you know and adhering to a disciplined investment process. We think this is a much better path to long-term investment success than what amounts to trying to predict human behavior.

[us_separator]

The above post has been excerpted from a recent letter of Granite Value Capital.

This newsletter contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this newsletter will come to pass. Investing in the stock market involves the potential for gains and the risk of losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. Any information prepared by any unaffiliated third party, whether linked to this newsletter or incorporated herein, is included for informational purposes only, and no representation is made as to the accuracy, timeliness, suitability, completeness, or relevance of that information. Granite Value Capital, LLC is an SEC registered investment adviser with its principal place of business in Hanover, NH. Granite Value Capital and its representatives are in compliance with the current notice filing requirements imposed upon registered investment advisers by those states in which Granite Value Capital maintains clients. Granite Value Capital may only transact business in those states in which it is notice filed, or qualifies for an exemption or exclusion from notice filing requirements. This newsletter is limited to the dissemination of general information pertaining to its investment advisory services. Any subsequent, direct communication by Granite Value Capital with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of Granite Value Capital, please contact Granite Value Capital or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov).