That’s precisely the question asked by BCA Research, the international independent research outfit. In a recent report titled ‘Global Equities: Is all the good news priced in?’ it argues that “investors seem to be pricing in not just a soft landing for the US economy, but the Goldilocks scenario. This optimism can be observed through US equity market sentiment surveys, which have all surged in recent weeks”.
Incidentally, a Dresdner strategy note says that, along with the new highs for the market indices, the frequency with which the word ‘Goldilocks’ appears in the financial press has also reached its highest level ever since the word came into vogue in the mid-1990s to describe an ideal economic environment.
BCA Research points out that “from a contrarian perspective, it would be unsurprising to see a modest market correction in the near-term (which may already be underway). However, we doubt that there is room for much sustainable downside given historical sea-sonal patterns”.
Sourced from BusinessWorld India mag
If you are a know-something investor, able to understand business economics and to find five to ten sensibily priced companies that possess important long-term competitive advantages, conventional diversification (broadly based active portfolios) makes no sense to you. – Warren Buffett