MFS: Response to stock market sell-off

MFS: Response to stock market sell-off

5 augustus 2024

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Koersgrafiek (08) koers pijl omlaag daling crisis

Robert Almeida, Global Investment Strategist and Portfolio Manager at MFS Investment Management, responds to the sell-off on the stock markets:

'It is hard to know what the stress point for the selloff was. We think it’s a combination of many factors that have led to too many leveraged trades heading for an exit that can’t fit all of them. Many wonder whether the market is overreacting. Price is what you pay and value is what you get.  The price of risk assets was too high and value (i.e., returns on equity) we believe was below what people have been expecting. Volatility is the market adjusting for incorrect assumptions, which brings us back to the prior question, the market’s expectations about incomes, we think, was too high.  While profits or earnings have yet to crash, markets discount it before it happens via tangential evidence – which is perhaps what it got last week.'

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