Could the multi-decade period of over-valued equities near an end post-Brexit?

Interest rates set to be lower for longer

Having in previous months highlighted a desire for a market shakeout, I will in future be more careful what I wish for. I was merely hoping for a rerating of stocks to provide us with some interesting opportunities at cheap prices.

Instead, Brexit introduces the risk the UK economic backdrop deteriorates more significantly over the next few years than the market had previously assumed, which has led to significant weakness in some shares. While we always assess companies on their prospects of profitability through the entire economic cycle (implicitly allowing for recession as well as booms), we appreciate the market is a lot more sensitive to short-term news, and, in particular, profit downgrades. Theoretically, seeing analysts hurriedly cutting their forecasts on swathes of stocks, and consequent share price f...