If the last few years have taught us anything, it’s that investors became so giddy that they allowed momentum to carry them along—ignoring fundamentals in the process. Ryan Heslop and Ariel Warszawski of the David Einhorn-backed Firefly Value Partners described this trend as “a golden age of belief trumping reality,” a description that certainly seems apt, even after today’s strong equity rally.
By the end of 2018, it started to look like the stock markets were falling back down to Earth. When Heslop and Warszawski wrote their third-quarter letter in late October, they said that “reality might be staging a comeback.”
A glimmer of reality, but not for long
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