Investors should become more enthusiastic about US small-cap stocks when valuations become more compelling. Small-cap valuations today are unusually rich. Our preferred composite P/E ratio indicates the Russell 2000® trades at 33.7 times normalized earnings, about 60% above fair value and in the top 2% of all historical occurrences. Short-term metrics are little more compelling;…
We continue to advise an overweight to Eurozone equities versus US equivalents given attractive relative valuations, greater potential for earnings growth, and tailwinds from the improving macro environment Eurozone equities have performed strongly year-to-date but may have more room to run given valuations and weaker medium-term performance. UK equities have similar valuations but are less…
We are on record advising clients to underweight US equities, as they are overvalued both in absolute terms and particularly relative to non-US markets. That said, we believe strongly in the value of constantly looking for where we could be wrong; thus, we have lately been exploring analyses that make the case for a bullish…
This chart book presents representative marketable and hedge fund manager performance for first quarter 2015. The median Global ex US Small-Cap Equity manager posted the highest return (5.9%) for the quarter; the median manager in this asset class returned -1.6% for the one-year period ending March 31, 2015. The median US REIT manager posted the highest…
Quicksilver Markets Ted Berg, Office of Financial Research, March 2015 Earlier this year, US equity investors celebrated the current bull market’s sixth anniversary and the tripling of prices that accompanied the uptrend. These heady gains have left equity prices high by historical standards. In a recent article, the US Treasury Department’s research arm notes that…
Chinese equities have captured headlines recently, with trading volumes surging in Hong Kong and the MSCI China Index (which tracks the performance of Chinese companies listed in Hong Kong) rising 14% over four trading days (April 8–13). The catalyst was a decision in late March by mainland Chinese regulators to allow domestic mutual funds to…
Over the past two years, India has come full circle, moving from a member of the so-called Fragile Five economies with poor macro fundamentals to one of the few emerging markets with a positive macro story. India was among the best-performing equity markets in 2014, returning 24% in US$ terms, compared to -1.8% for emerging…
This chart book presents representative marketable and hedge fund manager performance for fourth quarter and calendar year 2014. US Real Estate Investment Trust (REIT) managers posted the largest median returns for the fourth quarter (14.2%) and the one-year period ending December 31, 2014 (31.2%).
In many ways, 2014 was a tale of two halves as returns reversed in the second half. Renewed US dollar strength and falling commodity prices were key contributors to the reversal. This brief chart book looks at returns and other market metrics for 2014.
The Bank of Japan’s (BOJ) surprise announcement that it would dramatically ramp up its QE efforts is a tacit admission that “Abenomics” is stalling, and supports our view about the underlying health of the Japanese economy: excessive debt levels, demographics, and overdue structural reforms are serious headwinds to growth. To briefly recap, on October 31…