More Capital Flowed Into Global Equities In 2021 Than the Past 10 Years Combined
The monetary and fiscal induced market rally since March 2020 has been remarkable in many ways, not least the amount of capital that has been directed to global equities in 2020, but especially 2021.
There were sound reasons for stock markets to begin to rally last March. Stocks were oversold, and the various stimulus efforts provided a tailwind.
However, extremes of any kind should bear the scrutiny of investors, for they may offer clues to market turning points. The scale of the move into global equities, by both institutional and retail investors, reflects an elevated level of investor optimism that is concerning.
It is our view that markets reflect investor expectations that are at odds with the risks posed by historically extended valuation levels, the prospects of a slowing global economy, COVID, and deteriorating geopolitics.
In our opinion, the risk/reward proposition offered by equity markets currently is less than compelling.
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