Inker: Bear markets progress across three distinct phases of quality and valuation
Ben Inker · Ben Inker – Value Investing at GMO (First Meeting, EP.17) · Mar 30, 2020 · at 1:14:16
Ben Inker, Head of Asset Allocation at GMO, summarizes GMO and Jeremy Grantham's 45-year historical research on how factor leadership evolves during prolonged bear markets.
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“In the first stage of bear markets, everything tends to go down the same, and if anything helps, it's quality. In the second phase, valuation tends to matter. That doesn't mean value stocks always outperform in the second phase. It is the stuff that has gotten really cheap starts to outperform. And then in the third phase, You can even start to see a change in sign where the really cheap stuff, even before the market has hit the bottom, can start to turn around.”
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