As of late, analysts have repeatedly sounded the alarm over
the extreme valuation in the U.S. equity markets by looking at just about every
traditional market valuation metric. Interestingly enough, a recent
survey of institutional investors by Bank of America Merrill Lynch found that
while most institutional investors agreed the market had an “excessive
valuation”, those same managers also were heavily over-weighted in equities.
Analysts have coined the term “fully invested bear”, to describe this new
behavior. The explanation for this paradoxical stance could perhaps be
best described by the relatively new acronym of “FOMO” – “Fear Of Missing
Out”.
Womack Weekly Commentary September 18, 2017 The Markets “In theory, there is no difference between theory and practice, in practice there is.” Yogi Berra was talking about baseball, but the concept also applies to diversification, according to the GMO White Paper, The S&P 500: Just Say No . From the title, you might think the authors – Matt Kadnar and James Montier – don’t like U.S. stocks. They do: “Being a U.S. equity investor over the past several years has felt glorious. The S&P 500 has trounced the competition provided by other major developed and emerging equity markets. Over the last 7 years, the S&P is up 173 percent (15 percent annualized in nominal terms) versus MSCI EAFE (in USD terms), which is up 71 percent (8 percent annualized), and poor MSCI Emerging, which is up only 30 percent (4 percent annualized). Every dollar invested in the S&P has compounded into $2.72 versus MSCI EAFE’s $1.70 and MSCI Emerging’s $1.30.” The au...
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