- Davis Rea/TVInnerViews
- The Big Picture
- Davis Rea/TVDavis Rea/TV
November 2, 2012
February 27, 2013
November 22, 2013
October 22, 2013
Neil Young, the Canadian singer-songwriter and musician, wrote this sombre tome about growing up and the end of adolescence. As in life, investing has cycles. Major drivers of investment cycles are interest rates and government fiscal policies. There can be little doubt that interest rates and government fiscal policies have seldom been so instrumental and blatantly aimed at jacking up asset values, the economy and supporting dysfunctional national governance. This observation is not directed at any specific political boundary. This is a global phenomenon. We live in a world on a sugar high of cheap money and fiscal rhetorical cheer supported by a crew of financial “barkers” giving away coloured balloons. We may be poo pooed for our dour and sceptical views but we “call ‘em as we see em”.
Please click on the link below to read the entire Chairman’s Letter.
November 9, 2013
As described in our October publication of The Big Picture, current market valuations point to well below average returns over the coming decade. U.S. equity markets are expensive according to our long-term valuation models, roughly 30% above fair value. The market is expensive, but not in bubble territory as it was in 2000 when it was 150% overvalued. Valuation models do not give much guidance on timing as markets can stay overvalued for extended periods. Author Henry Blodget from the Business Insider believes that stocks are overvalued by 40%-55%, and explains some of his rationale and thoughts on when a crash might occur.
Please click on the link below to read our full commentary and the complete article from the Business Insider.
December 5, 2013
“Investors should be aware that the U.S. market is already badly overpriced – indeed, we beieve it is priced to deliver negative real returns over seven years – and that most foreign markets having moved up rapidly this summer are also overppriced but less so. In our view, prudent investors should already be reducing their equity bets and their risk level in general. One of the more painful lessons in investing is that the prudent investor almost invariably must foreego plenty of fun at the top end of markets”. This is just one of many quotes from a recent publication by Jeremy Grantham, co-founder and chief investment strategist of GMO, a Boston-based money management firm. He thinks that U.S. stocks can rise another 30% but cautions that danger could then beckon.
Please click on the link below to open and read the entire publication by Jeremy Grantham.