Gary Moglione

Pockets of value arise amid corona crisis

Value investing is difficult enough in benign environments, but in the current circumstances, it is proving particularly challenging. Suddenly, consumers are confined to their homes and global demand for many products has moved close to zero, with the exception of medical supplies and groceries.

Investors hate uncertainty. When faced with such extreme risk and uncertainty, their first instinct is to flee. The stock market has been a conduit of fear in recent weeks, which is perfectly understandable given the chaos that surrounds us.

Why I am going against the crowd by having zero exposure to US equities

US equity indices continue to hit new highs on a regular basis, so questions must be asked about the sustainability of the stellar returns produced since the financial crisis. This is the longest post-war bull market, and since the bottom of the market on 9 March 2009 the S&P 500 has returned 448%, surpassing the 417% record set in the 1990s.

Time to switch from growth to value?

With stockmarket indices near all-time highs, capital growth has not been a problem over the last decade or so: investors have had a good ride. Quoted companies have found it cheap to borrow money, which has led to greater levels of capital expenditure and boosted profits, in turn encouraging more investors to buy shares and pulling prices up.