Read our First Quarter 2021 Review

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We anticipate the global economy will strongly rebound this year, as the pandemic recedes with broader vaccine distribution.  The economic reopening should finally revive the ailing service sector, thus adding to a recovery that has already been underway in manufacturing.  The services recovery could lead the domestic economy to expand at the fastest pace in nearly four decades, eclipsing the 7.2% expansion in 1984 that was driven in part by heavy inventory restocking following a sharp rebound in consumer spending on the heels of the 1982 recession.  This pattern looks remarkably familiar to us today.  Inventory levels are currently very lean as public health measures resulted in manufacturing being shuttered which laid bare the fragility of a global “just-in-time” inventory web.  Even as management teams bring production back online, logistics remain in disarray as evidenced by significant port congestion and increases in transport costs.

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Read our First Quarter 2021 Review: International Equities Strategy

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Economic and Capital Markets Commentary

Decreased pandemic risks, low global interest rates, positive inflection in economic activity, strong consumer condition, and pent-up demand for goods and services has driven strong market performance during the first quarter with much healthier market breadth than 2020.  We continue to see economic data improving throughout the year, and the strong performance of cyclicals relative to non-cyclicals persisting.  At this time, we don’t see a structural reversal of a trend that has favored growth since the Great Financial Crisis, but we do expect some further relative strength as the health crisis wanes, economies recover, rates move higher, and earnings improve in more cyclical markets.

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Read the Wall Street Journal Transcript: Investing in Competitively Advantaged Companies with Strong Managements

TWST: Please give us a snapshot of Luther King Capital Management, a bit about the company’s history and business today.

Mr. King: Luther King Capital Management was founded in 1979 by Luther King, after he had served for nearly a decade at Lionel D. Edie. He stepped out on his own to establish a firm here in Texas. The initial clients were from the Fort Worth and Dallas area. The requests from initial clients were for him to establish a firm based in Fort Worth and to focus on the investment research as opposed to marketing.

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