This week accomplished some important downside work in the necessary mean reversion of over-valued “defensive” equity sectors and markets. The below chart is an update showing the gap that is slowly closing between the cycle leaders: energy, materials and mining shares–all approaching their 2009 cycle lows–and the Reits, financials, dividend paying stocks, and broad TSX (and S&P, not shown) they have buoyed year to date. Exciting investment value will present once this gap is closed once more. But first, widely held beliefs in “diversification” and “decoupling” must again be revealed as sales puff nonsense.
Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.
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