Value in a post-Brexit world

Prior to the Brexit vote, there was a wide range of valuations but few cheap assets globally, as shown in the chart below. With most asset valuations still looking fair to expensive, it’s important to focus on relative valuations.

 

 

Modest economic growth, low inflation expectations and easy central bank policies have sent yield lower, intensifying flows into income-oriented assets. This partly explains extreme valuation differences between equities and government bonds. Valuations tell us little about short-term returns but can potentially shed light on medium-term returns. Starting valuations explain roughly 10% of U.S. equity market returns over the following year but 87% of returns over the next 10 years, according to the analysis back to 1988.

 

Source: https://www.blackrockblog.com/2016/06/27/investing-opportunities-in-post-brexit-world/?utm_source=BlackRock+Blog&utm_campaign=55944f4f41-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_7beec13d69-55944f4f41-305431717

Disclosure: This website contains the public articles, and this communication is for informational purposes only. Nothing herein should be construed as my opinion, solicitation, recommendation or an offer to buy or sell any securities or product, and does not constitute legal or tax advice. The information contained herein has been obtained from publicly available sources believed to be reliable but we do not guarantee accuracy or completeness. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional investment, legal, tax, or accounting counsel.

 

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