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Alternative Market Briefing

Value investors face a difficult opportunity set as asset prices increase

Tuesday, April 09, 2013

Bailey McCann, Opalesque New York:

Investors are facing "the most difficult opportunity set," they can face according to a recent Opalesque Radio interview with James Montier. Montier is a member of GMO's Asset Allocation team. Prior to joining GMO in 2009, he was co-head of Global Strategy at Société Généralé. He has authored several books including the well known Behavioural Investing: A Practitioner's Guide to Applying Behavioural Finance. He says that under current market conditions, investors may have a hard time finding cheap opportunities. For value investors like Montier, it can be difficult to participate in markets like this.

"We now find ourselves in a world where everything is expensive," Montier says noting that even holding cash is going to be punished as the US Federal Reserve bank is pushing investors to create a new bubble, albeit more rational than the last.

In this environment he explains that it makes the most sense for investors to hold high quality equities, and take advantage of opportunities like emerging and international markets exposures as they arise. He points to the European equities markets which were, at one point, pricing in the collapse of the Euro offering value investors cheap opportunities.

These opportunities can come and go quickly in this market environment, however, and Montier says it also makes sense to keep a fair amount of ......................

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