II. Monetary Policy: The second pillar of our investment process is an assessment of monetary policy and credit conditions which is extremely important to our overall investment process. Every bear market in the last 100 years has been preceded by tightening monetary policy and deteriorating credit conditions. Negative credit conditions have historically been lethal to stock prices and therefore we are particularly mindful of monetary conditions. We assess monetary policy and its impact on the general level of interest rates.
We also review credit conditions in terms of evaluating and analyzing credit spreads and their directions.