Sarah Ketterer Discusses Investment Management

Market Inefficiencies

Sarah Ketterer highlights the inefficiencies in the market caused by the rise of indexing and algorithmic trading. She explains that as stocks grow in index size, they attract more investment, leading to a momentum-driven market that often trades below fair value. This creates opportunities for active managers like her to capitalize on undervalued stocks.

The more we index, the more opportunities are created for active management.

--- Sarah Ketterer

Ketterer believes that these inefficiencies are not just limited to the U.S. market but are a global phenomenon, offering potential for strategic investments 1.

   

Value vs. Growth

The ongoing debate between value and growth investing is a focal point for Sarah. She notes that while value stocks have underperformed, the gap between value and growth is widening, creating potential for a shift. Ketterer suggests that a catalyst for value's resurgence could be disappointing earnings from expensive growth stocks, triggering momentum selling.

Markets are tremendous discounting mechanisms.

--- Sarah Ketterer

She emphasizes that market cycles are unpredictable, but the extreme valuation gaps present significant opportunities for value investors 2 3.

   

Investing in Crisis

Investing during financial crises can be advantageous, according to Sarah. She argues that crises often lead to undervaluation of strong companies, providing a prime opportunity for value investors. Ketterer cites Volkswagen's scandal as an example, where the company's strong financials and asset quality made it a worthwhile investment despite the crisis.

There's always a price for everything, no matter what it is.

--- Sarah Ketterer

She believes that the current global economic uncertainties, such as trade wars and potential recessions, offer similar opportunities for strategic investments 4 5.