Exposure rates of the Dorval Asset Management Range – 17th January 2020

After the forceful rally on the main stock-market indices since the summer, many observers contend that the equity markets have now gone too far in pricing in the moderate upturn in the cycle expected in 2020. 

We do not hold with this argument, as long-term rates have barely edged up and cyclical stocks have not dramatically outperformed. In our view, the real crux of the matter on the market still stands i.e. the steady rise for growth stocks and whether their valuations are warranted with a P/E of close to 24x on the MSCI World Growth index – its most lofty point since early 2002 (cf. chart 1) – or whether they are totally outlandish.

 

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