This time around has been different than every other in that a top few issues - less than 20 names - have driven market indices higher to extreme valuations, while the remaining have lagged at various levels of discounted valuations.
Retail Money Funds continue to post record highs, and fear of recession continues at a high level. Retail Money Funds have a long history of turning lower only when the perception of recession gives way to economic
Todd Sullivan is a Massachusetts-based value investor and Co-Founder and General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer supports his original thesis. His blog features his various ideas and general commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain's NY and others. He has also appeared on Fox Business News and is a RealMoney.com contributor. He has twice presented at Bill Ackman's Harbor investment Conference and is a regular presenter at the Manual of Ideas "Best Ideas" conferences. Visit his sites: ValuePlays (https://valueplays.net/) , Rand Strategic Partners (https://randstrategicpartners.com)
Elevated Retail Money Funds signal persistent recession fears; historically, their decline marks a shift to economic recovery and increased equity flows.
Fewer than 20 stocks have driven indices to extreme valuations, while most equities remain at discounted levels, creating a bifurcated market.
Avoid the overvalued index leaders and allocate capital to the broader set of discounted equities for superior risk-adjusted return potential.