Equity investors have had a turbulent time over the past 15 years, including a dotcom boom and bust, the financial crisis in 2008 and the rise and fall of the mining sector. So it is hardly surprising that they have become a little choosy about the stocks they favour. Orrin Sharp Pierson, a strategist at BNP Paribas, points to a huge preference among investors in recent years for “quality” stocks. He defines such stocks as those with the least volatile profits. As the chart shows, when the market was bottoming in late 2008 and early 2009 there was little difference in valuation between high-quality and low-quality companies. But the gap has widened steadily ever since. Quality stocks now trade at around 3.5 times their book (or asset) value.