The case to invest globally just got stronger
Right now, there’s no shortage of analysts cautioning investors that equities are over-priced, given that many businesses are sitting on elevated, if not euphoric, multiples. But looking more closely, is it the right time to switch out of cash and into global equities?
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Chris
:
But you have to be VERY selective. Overall, the S&P500 (on all the indicators like CAPE, Coppock Ratio, Buffett Ratio etc.) is very expensive, so buying the broad index won’t work. Not just the ‘unicorns’ that have run hard, it is all the FAANG stocks too.
Michael Shapiro
:
I believe the market, by design, creates a very small number of winners, and a large number of losers. This is structural and inherent. There has been talk of eventual bear market being the most anticipated bear market in history. However, the bear market cannot start when too many participants are actively anticipating it, and are ready for it. In order to create the biggest number of losers, and inflict the maximum amount of pain, the bear market will begin when almost all participants abandon their believes in imminent bear market, and stop anticipating it. That’s when bear market will hit, and hit very hard creating losers out of 99% of participants.
Mark Egan
:
Hi Roger,
“will now normalise 12x medians and build its way toward normalising 13x”. Isn’t this an example of a “new normal”. I’m surprised you advocate this as you have been warning about accepting “this time is different” for a while now.
Roger Montgomery
:
Just presenting the alternative view Mark. Always helpful to explore all angles.
andrew ronan
:
This new normal theme has been making the rounds for a long time now, and when you see people like Roger acknowledging it, ( not promoting it) you wonder how many dissenters are left on the sidelines. Which may bring Michael Shapiro’s scenario a bit closer to reality.
Roger Montgomery
:
Definitely leaning on the side of the dissenters here domestically. Just look at our domestic cash balance. Also interesting take a look at the cash balance of Berkshire Hathaway too? Keep in mind Berkshire needs very large acquisitions. Buffett has frequently noted that if he had a smaller fund (in the US) he could be fully invested. Far fewer opportunities that represent value domestically.
Andrew Bunting
:
Demography! OECD greying populations are a powerful anti-inflationary tide, forcing statistical and policy inducing icebergs into global monetary & fiscal oceans. (Excessive mix of metaphors but you get the drift…)
Roger Montgomery
:
was the ‘drift’ pun intended?