Macro outlook should not drive stock selection

ON UK INCOME

LVAM's Graham Ashby says investors are placing too much emphasis on the economic outlook rather than valuations.

History clearly shows the correlation between stock market returns and GDP growth has been consistently poor, so why do so many fund managers insist on using an economic outlook to drive their stock selection or asset allocation?  Surely it makes more sense to construct a portfolio of well managed companies on undemanding valuations and to use the inherent volatility of equity markets to build up these holdings when Mr Market is in a bad mood? On this basis, one of the most interesting places to invest at the moment is in UK equities.  Many investors and commentators are continuing to...