In their latest quarterly shareholder letter, The Delafield Fund (DEFIX) portfolio managers J. Dennis Delafield and Vincent Sellechia discuss the domestic economic landscape and drill down on specific equity holdings’ performance and M&A activities over the last quarter.
They write that while 2013 was “a good year,” “the global and economic instability that concerned us throughout has not dissipated.”
However, “the US economy does seem to be gradually improving” and while corporate earnings are better, “companies are reluctant to expand capital investment.”
They also note that the Fed’s “commitment to higher inflation means it would not be prudent to be as defensive as valuations suggest we should be,” and “interest rates must eventually rise” and “businesses pick up” now that the taper has started. They feel the taper is unlikely “to derail progress” or abort the housing recovery.”
On the plus side, they point out that the purchasing power of savers should improve, consumer net worth continues to rise, and low cost energy, pending some infrastructure improvements, should be a boon to the economy.
The full letter can be found on the Tocqueville website by clicking here.
Full PDF see here: DEFIX letter 4Q13