Sunday, 6 August 2017

Stories we should be thinking about

Stories we should be thinking about

Macro matters:

I have to start with the below chart which which brought to my attention by @callum_thomas.
  
Here’s my take:

So every single institutional investor surveyed by Yale ICF expects higher stock prices year from now (with a mere 99% of individuals giving the same response).  Bonds may remain expensive on a historic basis, cash offering little yield and earnings season to date may have been at least workable across most geographies but such enthusiasm feels overdone.  Better to pick a selection of individual equities you like for individual reasons rather than a passive index because fees are cheap and 'there is no alternative'.  Think alpha and not beta for the rest of the year and into 2018.


Fascinating chart!  We all know that with too many markets around the world kicking around at all-time highs that inevitably sentiment is high…



…but what about the fundamentals?  I thought this was rather good, showing that on most metrics apart from free cash flow, valuations are very high versus history.  This is in-line with my experience where one of the free rationales for still being excited about stocks is the free cash flow yield – such an important filter for stock-driven analysis! 

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