Beware ETFs, dividend stocks and market darlings

Beware ETFs, dividend stocks and market darlings. Sarah Ketterer the CEO and fund manager at Causeway Capital Management says Where you don't want to be is passive. There's a massive amount of money moving into [exchange-traded funds]. But just buying the S&P 500 or a world index in an ETF? It's not a good time for that, because markets are fully priced. And the stocks that make up the largest weights in the benchmark are the ones that are most fully priced. Whereas you could have bought anything in early 2009 - you could have thrown darts and made a fortune. For the last couple years, investors have flocked to consumer staples, utilities and health care globally. They've wanted [those] consistent earnings and dividend yields. It's going to be hard for those stocks to meet expectations. [There's] this idea that investors will pay anything for stability. [But] eventually valuations do matter. You can't have one portion of the market levitate irrespective of the rest. Those stocks are likely to, best case, stagnate, or maybe even decline. (VIEW LINK)


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