Is Brexit uncertainty good for Euroland-focused value managers?
In the short term, Brexit uncertainty is good for the eurozone. In the sense that there should be a migration of higher-margin jobs away from the UK and towards the continent, and markets should anticipate that. Longer term, the value opportunity may turn out to be in UK stocks, but that is probably at least two years away, when Brexit is finally sorted out.
Value vs growth: where do we go from here?
One of the reasons that growth has performed so well over the last nine months has been the decrease in volatility in markets. Decreasing volatility allows investors to look further out, extending their time horizon, on the assumption that what they have seen in the recent past is what they will see two years further out. There is a saying in markets that if someone tells you this time it will be different, don’t believe them. I have yet to see conditions in markets where volatility remains this low for very long. So I think it is unlikely that growth will continue to outperform at quite the rate it has.
Where are you finding value?
I am finding value in the market where other people are selling, because of fear and greed. So at the moment, I am seeing opportunities in financial stocks, automobile manufacturers and equipment suppliers to automobile manufacturers.