With equity markets near all-time highs, many pundits are eager to claim that valuations are stretched and the market is ripe for a pullback. One particular segment of the market that always seems to get the most pessimism is the U.S. small-cap market, and everyone seems to highlight the Russell 2000 Index price-to-earnings (P/E) ratio as the example for all small caps.
As we enter deeper into first-quarter earnings season, we will likely soon find out whether aggregate earnings growth on the S&P 500 Index is heading for its first back-to-back quarterly contraction since September 2012.
Chinese stocks—measured by the Shanghai Composite—have been off to the races in recent months. Investors are starting to expect more stimulus measures from the central bank and government, and there has been an opening of China’s capital markets, encouraging investment sentiment.
Recently, I highlighted a passage from Warren Buffett’s annual shareholder letter that reveals how Buffett thinks about attractive investment options. One of the downsides of Buffett’s success is that his potential acquisition list is mostly limited to lage-cap equities because of the size of Berkshire Hathaway.
This week Professor Siegel and I chatted with Gavin Serkin, Emerging Markets (EM) Editor at Bloomberg News. We also spoke to Worth Wray, Chief Strategist at Mauldin Economics, whose current focus is also on EM and the implications of a stronger U.S. dollar.