While the AI-fueled rally in megacap tech names such as Nvidia and Microsoft has driven market gains for most of this year, the recent summer wave of selling has brought attention back to their lofty valuations and need for diversification.
The market is now "spreading out," Sean Peche, portfolio manager at Ranmore Fund Management told the Global Markets Forum on Thursday.
"People have realized they're all on the same side of the boat - long US, long growth, long tech and are diversifying... nothing goes up in a straight line so expect some zigging and zagging but value has turned the corner," Peche added.
As to where to look in value, Peche said European banks should do well.
"Retail banks know what their mortgage books will earn for the next few years, Apple doesn't know how many phones they're going to sell next quarter," he added.
"And yet some banks are on very low single digit earnings multiples and Apple is on 30 times earnings with one of the smartest investors in the world Warren Buffett selling."
Warren Buffett's Berkshire Hathaway nearly halved its huge stake in Apple, according to a recent regulatory filing.
(Bansari Mayur Kamdar)
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