The Meb Faber Show - Better Investing BofA's Savita Subramanian on The New S&P 500: AI-Driven and Asset-Light | #567
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Jan 24, 2025 
Savita Subramanian, Head of U.S. Equity Strategy at Bank of America and named one of Barron’s 100 Most Influential Women in Finance, dives into market trends as 2025 approaches. She discusses why today’s higher valuations are justifiable, the potential for productivity gains to spark a new bull market, and the surprising strength of corporate margins amid inflation. Savita also shares her thoughts on selective stock picking, the future landscape for small and mid caps, and the reshaping of investment strategies in the evolving financial environment.
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S&P 500 Evolution
- The S&P 500's composition has shifted significantly, with tech and healthcare now dominant.
- This makes comparing current valuations to historical ones less relevant, as business models have changed.
Valuation's Time Horizon
- Valuation matters greatly for long-term investments (8-12 years).
- However, it's a poor predictor of short-term market performance (1-2 years).
Contrary Indicator
- A reliable contrary market-timing model exists: average Wall Street strategists' recommended stock allocations.
- High average allocation suggests selling, while low allocation suggests buying.