Should You Be Investing in Cash?

With both stocks and bonds looking overvalued thanks to quantitative easing and other stimulus, should investors be turning to alternative assets such as cash?

Dan Kemp 25 October, 2016 | 12:10AM
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The latest bull market may prove to be one of the most hated bull markets in history. Pessimism is evident in the outflow of equities and a distinct dislike for anything that has perceived risk. This is naturally creating valuation anomalies which can be a source of both opportunity and risk for investors, and consequently is bringing the notion of value investing back to the fore in their minds.

Equity opportunities are fading on a valuation outlook

The irony behind this comment is that the point of maximum pessimism is typically a playground for value investor outperformance. However, unlike other periods of equity withdrawal in 2009 and 2012, we consider this cautious stance a partly-rational response, as it aligns with our valuation-implied return trends.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Dan Kemp

Dan Kemp  is Chief Investment Officer, Morningstar Investment Management EMEA