Post-election excitement is rising, but valuations continue to signal opportunity
Being a deep value investor can be a lonely endeavor. We crunch the numbers to find unloved companies that we believe have bright futures ahead — years ahead, in many cases. But if you wait long enough, market sentiment can shift and your previously unloved holdings may suddenly appear on everyone’s radar screen. That’s exactly what the deep value Invesco Comstock Fund is experiencing right now. But it’s not just two or three names that have recently gained investors’ attention; more than half of the portfolio has been pushed into the spotlight following the election of President Donald Trump.
2017 Investment Outlook series
While 2016 turned out to be a decent year for US equities, with the S&P 500 Index returning 5.87% as of Oct. 31, 2016,1 we witnessed historically high volatility that illustrates the interconnectedness of global markets.
• To start the year, we saw a market plunge in China so severe that it caused market circuit breakers to kick in for the first time.
• At mid-year, the UK’s “Brexit” decision to leave the European Union (EU) shocked the world.
• And at the end of the year, US voters concluded a controversial election season by choosing a Republican president and Republican Congress. While the process was tumultuous, this potentially has the ability to be a game changer in that market-friendly actions (less regulation, lower taxes and repatriation of US dollars held offshore) by the new administration are a real possibility.
Finding opportunity in energy and financials
From a sector perspective,Continue
Why these two sectors may be critical for value to outperform growth
The Russell 1000 Value Index has generally underperformed the Russell 1000 Growth Index for the past decade, on average.1 Naturally, this leads to questions about when the tide may turn back in favor of value. Below, I highlight two of the key factors that I believe will influence performance during the next few years.