Ask any experienced market participant about prevailing valuations and the response will be more or less the same. Experienced investors find it difficult to spot value in the current market. Yet, people still want to continue investing.

The lack of alternatives in other asset classes and the need to beat inflation over time are forcing investors to allocate more money to equity. And most of these monies are finding their way into the same narrow universe of stocks. This must change, and it most certainly will.

A pragmatic approach would be to bet on companies that will benefit from the shift in the market’s investment focus. This is not easy, as the markets have become excessively evidence driven. And companies that are heading into better times from difficult times, aren’t showing enough evidence.

It is every investor’s challenge to look beneath the surface and dig out the evidence before it becomes obvious to others. In the current context, one’s investing must be more investigative than evidentiary. The volatility created by elections will throw very interesting opportunities for investors who are better investigators.

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Posted on December 14, 2019

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