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S&P 500 Valuation Slips Below ’11 as Shaoul Advises Patience
Arnott's article below indicated the opposite view - US stocks are expensive based on a Shiller's 10 year average PE. Also he is shorting emerging markets
Arnott does not like US stocks and says that "Best is emerging markets. Their stocks are trading at a 20% to 30% discount to U.S. equities. Everyone sees emerging markets as the growth engine for the world economy. If so, why are they trading at a big discount to the parts of the world that are not the growth engine?" It is Michael Shaoul who shorts emerging markets. Perhaps they are talking about different time scales? Shaoul probably expresses his short term strategy, and Arnott is talking about much longer term. In the long term, his point of view is very similar to the view expressed by GMO: During the next 7 years, only high quality US stocks (among all US stocks) will have positive return, whereas foreign stocks may grow about 5% per year and emerging markets will grow even somewhat faster.
Marketfield's theories in regards to emerging market stocks aren't something I agree with, but I continue to have the fund as a "second opinion." Shaoul worries that EM has become overfavored in recent years (which is a little questionable after the price action of the last year or two) and a large scale exit from what are still rather illiquid markets will cause more considerable price declines. Marketfield is also short EM bonds and precious metals, the latter of which I think is a potentially highly risky choice.
Comments
http://finance.fortune.cnn.com/2012/06/04/pimco-rob-arnott-investing/
Whose view is more correct ?