Jeremy Grantham's right-hand man Ben Inker shares 5 trades to start making now for the best returns and smallest downside risk in the cheapest parts of the market
Global value and emerging market value stocks carry the most weight in the strategy among these five factors at 20% and 16%, respectively. The other three factors are all weighted at 6% or lower. Inker's bullishness on the above factors isn't a signal that he believes the global bear market is over. In fact, he and his firm think some broader equity indices like the S&P 500 may still have big downside.
But in addition to having a better long-term return outlook, Inker listed other reasons it's better start buying these factors now. "As bear markets age, valuation tends to become an increasingly important driver of defensiveness," he said."In the bursting of the internet bubble of 2000 for example, emerging equities fell even harder than the S&P 500 in the beginning of the bear market. But in 2001 and 2002, when the S&P 500 fell by a further 31.4%, MSCI Emerging fell only 8.6%, as cheap valuations made the group increasingly resilient to the general selling pressure.
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