Priced for perfection?
Hold on, before you get all gloomy –
Valuations matter more for performance over 10 years than over 1 year, as the different gradients in chart shows.
This is intuitive but non-trivial, it means if you think rich valuation drags on performance this year you need to have a convincing answer to what’s the catalyst.
I have some ideas…importantly, macro clarity that challenges the prevalent narrative probably does not come into view until later this year because goods inflation is still coming down, which is why momentum can run.