Mackenzie Minute: January 6, 2017
Richard Wong, Portfolio Manager on the Mackenzie Cundill Team, discusses the trends in recent market events and the rotation back to value investing.
Well, in the last couple of quarters, three significant events took place in the markets. And, initially, the markets thought it was going to be very, very negative. They were Brexit, Donald Trump's election, and the Italian referendum. But, in fact, what's transpired is that the markets rallied post those events and value stocks outperformed during those rallies. The reason is quite simple. The global economy after a number of very anemic years, is actually accelerating. And accelerating growth in a global economy is very positive for value investing.
Well, in the very near term, we're going to see the inauguration of Donald Trump and confirmation hearings of the people that he wants to appoint to his cabinet. This group of people is very pro-growth. They're going to be focused on stimulating the U.S. economy.
In a medium term, we can expect to see deregulation in key industries. We can expect to see tax reform. And, in addition to that, stimulus spending in terms of infrastructure; all of that is going to be very positive for US growth.
Well, we believe that the Cundill Value Fund is very well-positioned to benefit from reacceleration and global economies and re-emergence of inflation. On top of that, reacceleration of earnings. We believe that we are in the early days of a rotation back into value investing for investors to focus on these cyclical stocks that could benefit from acceleration around the world.