Smart investors should start betting against a bubble in growth stocks, according to a widely followed money management group, Ian McGugan writes. To that end, GMO LLC, the Boston-based investment company founded by famed contrarian Jeremy Grantham, has launched the new Equity Dislocation Strategy fund.
While the new fund is aimed at deep-pocketed institutional investors, Canadian households may want to pay attention to the thinking behind it, given GMO’s track record of spotting market bubbles before they pop. BMO’s Brian Belski: Next year could be one of the best for earnings growth - and stocks are poised to benefit
Yes, valuations appear stretched at first glance, writes Brian Belski, chief investment strategist of BMO Capital Markets. But they also need to be considered within the context of historically low interest rates and little inflation, ingredients that are likely to persist throughout 2021 and beyond, in our view. When viewed through this lens, we believe it is not unreasonable for market valuation to sustain current levels.
In addition, we believe corporate earnings growth is poised to recover sharply from pandemic lows, particularly during the second half of next year, since we believe much of the damage was lockdown-specific and not necessarily related to companies themselves.