“With the valuation-driven selloff behind us and cyclical profits more at risk going forward, we see many dislocations in themes where valuations are just too good to pass up...” — Jean-Pierre Chevalier
Key takeaways from his comment:
- Inflation, expectations for more aggressive tightening by central banks and Russia’s invasion of Ukraine have all had a heavy impact on stocks.
- The equity market’s key drivers are moving from valuation-driven to profit-driven as long-term yields reach a peak.
- A limited allocation to small and mid-cap companies and interest rate increases has pressured positions on the innovators’ side of the portfolio.
- Stock picking season in innovators is currently in progress. There are many opportunities with some stocks already pricing a deep recession scenario in dislocated themes.
Jean-Pierre Chevalier, CFA
Senior Director, Portfolio Manager, U.S. Equities and Thematic Investing, iAIM