Investors play risky game ignoring value
Recent market volatility should serve as a reminder of the risky game many investors are playing by continuing to ignore a value and blindly chase momentum, according to Antipodes Partners’ chief investment officer Jacob Mitchell.
Although the recent volatility was a blip during an extended period of market extremes surpassing the dot-com bubble, investors should be reminded that when the dot-com bubble burst a number of good businesses de-rated mostly due to the fact they were trading at excessive initial multiples.
“Trying to pinpoint a market turning point is typically fraught, however we’re in for a very interesting period and extraordinary multiple dispersion leaves us confident that the long-term future market leaders are most likely to be today’s misunderstood lower multiple stocks,” Mitchell said.
Mitchell also cautioned that, opposite to what some investors might think, the value is not dead.
“In today’s market a value-style exposure in investment portfolios is arguably more important than ever for investors seeking capital preservation and long term growth.”
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