Slow growth in equities means you have to look for value

Whilst we cannot predict whether equity markets will be higher or lower over the next 12-24 months, the significant over-valuations and storm clouds on the horizon are likely to result in equity markets delivering mid to low single digit returns over the next 3-5 years.

We believe that equity markets are overestimating the growth in earnings achievable by stocks in general over the next 12 months. In addition, financial markets are under-estimating the impact of the significant decline in commodity prices on the global economy, particularly the deflationary effects and the impact on emerging markets, especially China.

We believe that a strategy of selecting a concentrated portfolio of global equities utilising our fundamental deep value orientated stock selection process will deliver a superior result to investors over a 3-5 year time horizon than just investing in a equity exchange traded fund or closet index tracking fund. This may result in periods of under performance and higher volatility, but this is the quid pro quo for achieving a long term superior result.