Investec's Mundy: Equity markets are moving higher on fear

Q What is your equity investment process? Our strategy focuses on out of favour stocks which are cheap relative to our assessment normalised earnings (i.e. adjusted for cyclical ups and downs in the economy). Currently, given the relative strength of corporate earnings and still fairly expensive normalised valuations, we have chosen to apply this strategy patiently. One of the exercises we typically conduct as potential investors in an underperforming company is to speculate over the likelihood of its performance reverting to mean. We are particularly aware of the risks as well as t...