What Equity Investors Signaled That Bond Investors Missed

Posted on 09/19/2019


This article is sponsored by MFS Investment Management.

Research paper is by Robert M. Almeida, Jr., Portfolio Manager and Global Investment Strategist at MFS Investment Management.

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In brief

  • Markets send signals, such as signs of credit stress over a year before the collapse of Lehman Brothers.
  • The nearly decade-long outperformance of growth stocks over value stocks has been sending a signal to the bond market that went unheeded until recently.
  • Is it possible that growth’s unprecedented outperformance over value for much of the last decade has been signaling lower – if not zero – interest rates globally?
  • Capital markets discount all available information. Asset prices trade based on the push and pull between investors, with varying viewpoints about the underlying assets’ future cash flows.

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