Ben Inker on the bubble in speculative stocks unwinding

If the whole of the market is dominated by speculators with outsized expectations, it seems likely that deflation in the obviously speculative tier will take the overall market with it.

It is not a coincidence that value today is close to as cheap as it has ever been relative to the market, but it is convenient nevertheless. You can protect your equity portfolios by choosing to bias them toward value and away from the most expensive end of growth.

~ Ben Inker, head of asset allocation at GMO, "This signal is telling investors that highflying stocks are ready to fall back to Earth, says fund manager," MarketWatch, May 19, 2021