Quality stocks are finally cheap

There is no shortage of labels that investors use to differentiate their approach to picking stocks. Over the last few months, the financial lexicon has been dominated by the concept of a shift away from perceived ‘quality’ companies towards ‘cyclical’ businesses exposed to economic cycles. In the short term it has been painful for those investors who focus on the emerging parts of the market - so where to from here? Roger Montgomery says investors should look through the jargon and focus on the underlying companies. “The one criticism we receive for our style is that people say it’s easy to find quality but you’ll never get it cheap. And yet here we are, thanks to the big institutions that sold out of high quality mid cap names and rotated back into banks and resource companies and we think ultimately they’ll get their fingers burnt.”