Value Investing in a Bull Market

Mike Vinokur, portfolio manager at MV Wealth Partners with iA Private Wealth, discusses his outlook for the markets. Passive investing distorts stock prices, as capital inflows are spread across index stocks regardless of their intrinsic value, leading to potential overvaluation. As more money rushes into index exchange traded funds (ETFs), they are forced to buy more of the biggest weighted securities regardless of price. The money inflow further increases demand.

Markets are driven by animal spirits and FOMO (fear of missing out). As optimism intensifies that the market will no doubt rise, a positive feedback loop is created. Despite market irrationality, value investors should remain patient and focus on high-quality, undervalued companies, adhering to disciplined, long-term investment strategies. In the very near term, it is possible that prices will continue to surge. In fact, most strategists we follow believe that the S&P 500 Index will no doubt end the year higher by some 10-15 per cent or more. Where have all the bears gone? As value investors, we believe that the risk-to-reward ratio is not adequate in the broad U.S. indices, however we are finding good businesses trading at discounted valuations. We are currently carrying a higher-than-normal cash position in our equity-based model portfolios given that we feel sentiment is a little too exuberant. We expect markets to correct at some point in the first or second quarter providing us with opportunities to redeploy our cash.Mike Vinokur, portfolio manager at MV Wealth Partners with iA Private Wealth, discusses his top picks: Lincoln National, Suncor and Uber.Lincoln National is one of the oldest lifecos in the U.S. The company sells life insurance, annuities, group protection etc. What is notable is that as of the last quarter its book value was close to $47 per share yet the stock still trades at $32. You would think there is a problem with the business. We cannot seem to find on

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