VDE - Looking For Value Outside Of The Magnificent 7
2024-01-25 14:54:23 ET
Summary
- In this review I take a look at three sectors I believe offer reasonable risk-adjusted returns as equity indices climb to new highs.
- European equities have delivered strong gains despite concerns about inflation, sluggish growth, and geopolitical risks.
- I also see value in municipal bonds and Energy stocks, albeit for different reasons.
Main Thesis & Background
The purpose of this article is to take a macro-view of the markets at the current moment to try to find some ideas that have relative value compared to the S&P 500 (or NASDAQ 100). This is top-of-mind for me right now because the "Mag 7" are dominating market gains, delivering strong returns but also making US indices very concentrated and top heavy. While this has certainly been "good" news for holders of these indices and stocks, it begs the question on how much longer those gains can last. If the euphoria does not continue beyond January 2024, it will look silly in hindsight to not have diversified....
Looking For Value Outside Of The Magnificent 7