Rates, inflation, and volatility aren’t the only things on the rise in this bear market — so are opportunities in high-quality stocks for long-term minded value investors.
A defensive tilt has helped to protect investors against an inflationary hangover; if shares continue to slide, an “early cycle” pivot could begin to target the most attractive cyclical names whose long-term potential, in our opinion, isn’t being reflected in current valuations.
In the next phase of the downturn, investors are likely to focus on balance sheet strength again, which we believe bodes well for attractively priced quality businesses.
Small- and Micro-Cap Value
While frustrating, we believe the across-the-board selling so far in this bear market presents an opportunity for discerning small-cap bargain hunters to ‘buy from pessimists.’