All of these fears led to a broad decline in world equity markets as witness by a 12.7% decline in the MSCI world index and a flight from risk assets. The real question though is do these fears have any real impact on the long-term profitability of commercial business enterprises or are they simply a giant price discount that investor should pounce on.I’m sure you can guess our view. The one constant fact that seems to be perennially ignored by investors is that companies are run by people and the people react to changing economic situations. If there is inflation, they manage for inflation, if there is economic slowdown, they manage for economic slowdown. And although unanticipated changes in economic factors can cause an earnings dislocation, it is rare that fully anticipated changes will cause a problem.
Pzena Investment Management, Inc. Q2 2010 Earnings Call Transcript
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