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1.Market Observations, 8.Was Sticky

28 Feb 2015 (AFR) – How the market is testing value investors – Bond-like stocks: the ‘Telstrafication’ of the sharemarket

As the belief grows that interest rates in Australia will converge with the rest of the world and linger in low rate limbo for years to come, the faith of value investors – who try to spot bargains by buying stocks based on the fundamental worth of the underlying business – is being tested. Reuters

(28 Feb 2015, AFR, p35, Jonathan Shapiro and Patrick Commins)

‘As investors turn to equities for a bond-like fix, some stocks have been bid up to excessive levels.’

‘Goldman Sachs Asset Management’s head of Australian equities Dion Hershan is blunt. We are in the midst of a massive distortion of the equity market. “Valuations for some stocks in the REIT, infrastructure, telco, utilities and healthcare industries at the moment don’t make sense and are only justified by spot bond yields.” ‘

Read more at AFR.com (might need AFR login access)

 

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