In an environment of expensive valuations, absolute bargains are hard to come by. Russ Koesterich discusses why investors should focus on relative value and offers three areas where investors can find it.
Well, this is the big challenge right now. Nothing is cheap. And what I've come to say recently is that reasonable is the new cheap. In other words, you're not going to find an absolute bargain, but you do find some relative bargains. In that context, there are a couple of places we do think investors should be looking.
One, emerging markets, specifically in Asia. These are generally reasonable. We're seeing improving economic conditions; we're seeing some positive catalysts from recent elections, and also investor sentiment starting to turn. Second, Japanese equities.
Third, closer to home, we see better bargains in large cap cyclical companies in the United States, which appear not only cheaper than smaller-cap and more defensive companies, but also should be the biggest beneficiaries as we continue to see some improvement in the U.S. economy.
Related by Topic: Economic Outlook , Equities
Although last week was a challenging one for investors, we do not believe the sell-off reflects a fundamental shift in market conditions. However, Chief Investment Strategist Russ Koesterich discusses how it points to three important lessons to be mindful of going forward.
After stocks' strong performance this year, is it time for investors to be a bit more cautious? In their latest Investment Directions market outlook, Russ Koesterich and his Investment Strategy Group provide their take and detail where they see investing opportunities today.