Outrageous Prediction 2: Stagflation rewards value over growth
Using this fantastic chart to track how the 2020 outrageous predictions hold up over time: This is really one to watch - I personally believe that we have not yet topped out of the current liquidity cycle and so if this prediciton does come true it will only be after Q3 2020
"The iShares MSCCI World Value Factor ETF leaves the FANGS in the dust, outperforming them by 25%"
The world has now come full circle from the end of the Bretton Woods system, when it effectively shifted from a gold-based USD to a pure fiat USD system, with endless trillions of dollars borrowed into existence — not only in the US but all over the world. Each credit cycle has required ever-lower rates and greater doses of stimulus to prevent a total seizure in the US and global financial system. The mispricing of money and bailing out of zombies has seen productivity growth crater as low rates encourage chasing asset values higher and malinvestment in unprofitable unicorns such as Uber and WeWork. They also allow zombie, debt-laden companies to survive.
As the market narrative switches to stagflation, value companies and their solid, right here, right now earnings and dividends are highly prized over the stumbling growth companies, where weak growth weighs and where crazy high multiples were always about the mispricing of capital. The MSCI value ETF leaves the FANGS in the dust
home.saxo/en-gb/insights/news-and-research/thought-leadership/outrageous-predictions
"The iShares MSCCI World Value Factor ETF leaves the FANGS in the dust, outperforming them by 25%"
The world has now come full circle from the end of the Bretton Woods system, when it effectively shifted from a gold-based USD to a pure fiat USD system, with endless trillions of dollars borrowed into existence — not only in the US but all over the world. Each credit cycle has required ever-lower rates and greater doses of stimulus to prevent a total seizure in the US and global financial system. The mispricing of money and bailing out of zombies has seen productivity growth crater as low rates encourage chasing asset values higher and malinvestment in unprofitable unicorns such as Uber and WeWork. They also allow zombie, debt-laden companies to survive.
As the market narrative switches to stagflation, value companies and their solid, right here, right now earnings and dividends are highly prized over the stumbling growth companies, where weak growth weighs and where crazy high multiples were always about the mispricing of capital. The MSCI value ETF leaves the FANGS in the dust
home.saxo/en-gb/insights/news-and-research/thought-leadership/outrageous-predictions
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