Indiscriminate selling versus disciplined long-term investing

Markets today move in synchronised waves of buying and selling, often regardless of fundamentals. This is the consequence of shrinking time horizons and a market structure in which up to 80% of daily trading value is driven by non-fundamental investors. As a result, single-stock volatility has tripled, and even small earnings misses can now trigger selloffs of 20% to 40%. This is the reality against which we have to invest.

But in a world of indiscriminate panic, there is opportunity for investors who have done the deep work. Portfolio Manager Marc Talpert explored this topic at the recent BCI Global Investment Conference, and what follows is a summary of his key insights and how we are positioning our global portfolios in response.

THE MARKET CANNOT DISTINGUISH BETWEEN TRUE LOSERS AND MISUNDERSTOOD BUSINESSES

The market has divided the world into AI winners and perceived losers, moving capital with great conviction into obvious beneficiaries and synchronised selling of everything else. But that word "perceived" matters deeply, because many businesses being sold as losers are actually well-positioned for the future. Some of the businesses being indiscriminately sold today are not true AI losers, but rather businesses caught up in the selling alongside genuine losers, and the risk profile is completely different.

We have been through a similar process before. At the end of 2021 and into early 2022, the market swung sharply from growth at any cost to rejecting all unprofitable businesses, and that synchronised selling created opportunities. Spotify, for instance, fell sharply during that period and is now up three to four times from those lows – the opportunity cost of selling great businesses into a panic. The distinction between genuine disruption and temporary dislocation requires something the machine-driven market lacks: deep proprietary research.

OUR STRUCTURAL ADVANTAGE: A LONG-TERM HORIZON IN A SHORT-TERM WORLD

For us, this environment reinforces what we have successfully applied for 30 years: a long-term horizon and valuation discipline. It's increasingly rare to find managers who maintain both. True long-term managers with genuine long-term capital and the conviction to deploy it through cycles, are becoming scarce, displaced by short-term performance pressures and non-fundamental flows. We still believe that earnings drive stock prices, but that relationship plays out over five to 10 years, not five to 10 days. There is considerable noise, but on a decadal view, share prices and earnings should be closely correlated, which is why we structure our portfolios around what a business will earn through an entire cycle, not what it will earn next quarter. This long-term discipline, paired with deep proprietary research and valuation discipline, remains our DNA, and the investment philosophy we employ has not changed materially in three decades. In an inefficient, increasingly dislocated market, we believe that makes us structurally advantaged.

FOUR CATEGORIES OF OPPORTUNITY WHERE OTHERS SEE ONLY LOSERS

The biggest opportunities tend to come from the biggest changes, and paradigm shifts always create immense wealth while destroying it in equal measure. For example, the internet created businesses like Amazon and Netflix while destroying once-dominant names like Blockbuster and Kodak, and the mobile revolution saw Nokia completely disrupted by Apple. We expect AI to be no different, and against this backdrop, we see opportunity in four distinct areas.

• Deep infrastructure comprises the foundational layer of businesses that build the chips and equipment underpinning AI, such as TSMC and ASML. These businesses have operational complexity and proprietary moats that are difficult to disrupt.
• AI-first cultures are businesses like Alphabet and Meta that have always been technology-first, and the arrival of AI strengthens rather than threatens their competitive positions.
• Unexpected beneficiaries are emerging-market businesses such as Nubank, Mercado Libre, and Spotify, operating in high-growth regions and led by best-in-class management teams that are integrating AI while strengthening competitive moats.
• Misunderstood disruptees require deep analysis. Uber's value is not in matching supply and demand but in operational complexity such as surge pricing, driver supply, and customer complaints that cannot be easily replaced by an AI agent. Similarly, Booking.com has trust relationships with hundreds of thousands of hotels and provides post-travel support that goes well beyond what an AI chatbot can handle. Julius Baer, too, demonstrates that financial advice is fundamentally about trust.

CAREFUL PORTFOLIO CONSTRUCTION AND HUMILITY

We have previously commented that AI has the potential to disrupt many business models, and that there is a continuum of risk. We remain humble in our views and are willing to change our minds if the facts change. Still, we believe there are strong arguments that many companies are resilient to AI disruption, and that some will prove to be significant beneficiaries over time.

Our Coronation Global Optimum Growth Fund holdings reflect this conviction, with its top 25 holdings trading at a three-year average price-to-earnings multiple of 13x and offering a weighted-average upside of approximately 100% and an expected internal rate of return of more than 20%.

The portfolio does not reflect a concentrated bet on a single theme but rather diversification across a broad range of mispriced categories, dominated by what we view as AI winners and AI-neutral businesses. (For a fuller account of our recent portfolio activity, including the businesses we have been adding to during the dislocation, see our latest Coronation Global Optimum Growth Fund fact sheet).The Fund’s equity weighting sits at just over 80%, at the higher end of the Fund's historical range since launch in 1999, and we maintain put option protection of approximately 8% of the portfolio, enabling us to protect client capital during severe drawdowns while still taking advantage of dislocations. We saw the value of this protection during the Covid pandemic and again in the tariff volatility of the past year, and every drawdown in our Fund's history has been followed by significant outperformance. We are excited, and history shows us (see Figure 1) that these periods of dislocation have typically been followed by substantial rewards.

To watch his full presentation, visit the BCI Global Investment Conference 2026 page

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