Mundy's Moment: Preparing for a world where low risk becomes high risk and high risk morphs to low risk

Are concerns 'overcooked'?

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Alastair Mundy of Investec AM
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Alastair Mundy of Investec AM

One of their current rebuttals to value investors from those investors not in the value church (and boy, there do seem to be a lot of them these days) is that our stocks are cheap for a reason.

With the clearest value opportunities currently found in energy, banks and consumer-related stocks, it is true there are some structural issues that value investors need to wrestle with.  Although we would argue some of these concerns are way overcooked, some terribly clever chaps at Sanford Bernstein highlight the dislike of value is now so great that it is apparent within many sectors.  The chart (see bottom) illustrates this nicely and compares the cheapest stocks on price-to-book with the most expensive stocks across sectors. Is value rotation beginning of a long reversal trend...

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