During the Alpha Summit GLOBAL event by CFA Institute, finance experts discussed the challenges of investing in an environment where fundamental value takes a backseat to public policy and market prices become unpredictable.
The panelists highlighted the unprecedented influence of unconventional monetary policy on markets. The balance sheets of central banks, such as the US Federal Reserve and the Bank of Japan, have significantly expanded, resulting in an influx of money supply. However, the velocity of money, or the rate of turnover, has not increased in line with the increased liquidity. This suggests that the injected money has not been put to productive use in the economy, but rather has inflated asset prices.
Given these market dynamics, the panelists emphasized the importance of three key investment strategies:
Key Points:
- Focus on Long-Term Fundamental Value: A long-term perspective and a focus on companies that create value and have good management skills can help navigate difficult market conditions and unexpected events.
- Explore Fixed Income and Private Assets: The revaluation of assets in the market can present opportunities in fixed income securities, such as mortgage-backed securities, as well as in private assets. These assets can offer long-term value creation and stability.
- Be Contrarian: Consider looking beyond US tech companies and explore markets and regions that offer different dynamics and potential for asset revaluation. Emerging markets, in particular, may present contrarian opportunities given their current battered-down state.
By adopting these strategies, investors can better navigate market volatility and position themselves for long-term success.
Author : Editorial Staff
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