Diplomacy over war optimism where the Russia-Ukraine conflict is concerned continues to lift the investor mood on Friday, with stock futures pointing higher.
Our call of the day comes from GMO’s co-head of asset allocation, Ben Inker, who sees investors making costly errors these days. The first, “riding your winners and losing faith in all your losers,” has to do with investors piling into growth and U.S. stocks, and dumping Chinese and emerging equities.
And a growth bias is problematic, given value remains so cheap relative to growth — in the fifth percentage relative to history. “If it were to go to its historical average valuation versus growth, that would entail outperforming growth by approximately 68%,” he said. The biggest driver of those has been rising valuations, which isn’t a sustainable source of returns. That steady source is income and earnings growth that investors receive, and those will deliver less when prices are high relative to earnings, he said.
One year ago KenGriffinLied
When members of congress get banned from owning stocks the price will drop like 90% 😅