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Gloom Comes Before the Recovery

Barry Ritholtz

(Bloomberg Opinion) -- “There is always a price for everything” and at some point it becomes too cheap not to own. So says Sarah Ketterer, this week's guest on Masters in Business, and chief executive officer and co-founder of Causeway Capital Management, with $52 billion under management. She was Morningstar International Manager of the Year in 2017.

The world is awash in investment capital, and most of it has been going to high profile growth and momentum stock. This reflects, in part, the scars left by the financial crisis. The result, according to Ketterer, is that many cheap value stocks have been ignored, leaving them at crisis-level valuations despite excellent balance sheets and strong business prospects. Indexing, momentum trading and crowding is why many of these stocks are trading way below intrinsic value. She notes that “If you want to own the beneficiaries of recovery you need to own them during the dark gloomy periods.” When value snaps back, it can do so very quickly. In her view, this makes today a great time to make contrarian bets on European and emerging-market value stocks.

Ketterer's favorite books are here; a transcript of our conversation is available here.

You can stream/download the full conversation, including the podcast extras on Apple iTunes, Overcast, Spotify, Google Podcasts, Bloomberg and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.

Next week, we speak with Academy Award-winning producer Brian Grazer, whose film and television credits include "A Beautiful Mind," "Apollo 13," "Arrested Development," "8 Mile," "Splash," "Backdraft," "Liar Liar" and "The Da Vinci Code.” His new book is "Face to Face: The Art of Human Connection." 

To contact the author of this story: Barry Ritholtz at britholtz3@bloomberg.net

To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Barry Ritholtz is a Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”

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