Why SMIDs valuations stand out in a bifurcating US market

There are several signs the US equity market is bifurcating, with pockets of overvaluation and undervaluation becoming extreme.

A long period of low interest rates has benefitted those companies whose cashflows fall far into the future. Will US equity bull market continue? In a low growth world, investors are willing to pay up for growth. Growth indices have outperformed value indices by 800 basis points annualised over the last three years.  Across the US, there is in fact a technology transformation underway driven by cloud computing and Web 2.0. Disruptors, which are forcing incumbents to play catch up and creating vast new markets worth billions of dollars. However, the valuation multiples of q...