Market Drop Was ‘Collateral Damage’ of a Rethink, Credit Suisse's Golub Says
- Repricing ‘crazy high’ stocks without earnings, high P/Es
- Investors can make excess returns in this type of environment
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The stock market’s recent downturn is the result of many companies getting caught up in the repricing of richly valued stocks and the heightened volatility represents an opportunity to make “excess returns,” according to Jonathan Golub at Credit Suisse Securities.
Firms without earnings, high-P/E and high-sales-growth stocks, among others, were all priced at “crazy high” levels but didn’t deliver better earnings, which made them very expensive. Those types of assets then got repriced amid growing concerns about the Federal Reserve’s hawkish path and inflation -- but the repricing happened so quickly that it caused “near-term collateral damage.”