“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

— Often attributed to Mark Twain

Although the relative performance of the Wasatch investment strategies was mixed during the third quarter — some strategies were a bit ahead of their benchmarks and some were a bit behind— the 2019 year-to-date and longer-term results (i.e., five years) have been exceptional across most of our strategies. As always, you can access the up-to-date Wasatch performance for all the standard time periods on our website at wasatchglobal.com.

Our performance results over five years and beyond have been gratifying to us because the long term has consistently been our focus. Nevertheless, we know that the markets don’t always reward good investment decisions within the timespan we deem appropriate. This is why we think it’s so important for us to stay humble and realize that the wind won’t always be at our backs.

Moreover, we think it’s critical for us to continually question our analyses and investment decisions because we understand that “what you know for sure” isn’t always so. The discussion below reflects the results of hard questions to ensure that we stay positioned most appropriately in our U.S. small-cap strategies.

MARKETS

In our Market Scout commentaries, we often highlight the relative consistency of performance across financial markets by referring to the indexes available on Morningstar.com. For the year-to-date through September 30, 2019, of the 144 stock, bond, target and commodity indexes, over 95% of them were positive.

For the third quarter alone, however, consistency declined to the point where 75% of the indexes were positive. Moreover, many stocks took a breather from prior gains, and the losses that did occur were concentrated in smaller caps and in growth-oriented names.