The stock market is having a moment of truth. A two-week window in late August/early September witnessed so-called “Minimum Volatility” strategies lose their luster, underperforming Value by 4 percentage points. Could this value trend continue?
In several periods over the past decade, many sophisticated investors sought to profit from a rise in Japanese interest rates. Given the perpetually slow growth, combined with an ever-increasing long-term debt burden, they believed that the economic fundamentals did not support the lowest borrowing rates in the world. However, very few of these investors were ever able to profit from their economic thesis.