Watch Eugene break-down the US equity markets and review current stock positioning for our portfolios. While starting 2020 on a high note, markets became very volatile mid-February and especially in March. While Coronavirus dominates the market sentiment in the short-run, it is so important to invest with long-term prospective and patience.
Market update: Current market positioning for March 2020
In this edition of Signet’s market update, we will give an overview for US equities, size and style updates, various market statistics and valuation spreads, changes to our portfolio models, and how these fit into our current positioning in 2020.
To begin, we are currently monitoring current news and updates about the Covid-19 pandemic. We are taking special focus on how the environment will be supportive of US equities. Our sentiment has always been to stay selective and buy into strong fundamentals. This means our barbell growth and value approach will continue in order to have decent representation within the markets.
We do not see imminent recession but are seeing signs for caution for the next 12 months as the fear of the virus can change things in the short-run. This includes consumer behavior with the general population buying less, traveling less, increasing the volatility within the healthcare system. However, we still believe in the long-run that the virus will not derail the economy to continue growing.
Size and style updates
Moving on, we can still see a very prolonged dominance in growth style based on the value-growth dynamic graphic. Additionally, the valuation spread shot higher, surpassing previous levels mirroring that of the great recession. This shows just large the difference is between the most expensive stocks to the stocks that are cheaper. With small caps retreating, more investors are preferring large cap stocks as they are perceived as “safer” stocks during these times.
In conclusion, we are staying mindful of this insight with current market developments to help inform the long-term investor. We want to stay methodical with our current stock positioning and will continue to monitor Covid-19 updates. Stay tuned and thank you for joining us on this webinar.
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