Buybacks have gotten a bad rap from both Republicans and Democrats. But stocks would be trading at a massive discount without them.Marketsread more
Fiat Chrysler and France's Renault could soon partner up to take on the sweeping changes to the global auto industry, according to a report in the Financial Times. The...Autosread more
Microsoft shares have gained 133% since November 2015, outperforming a tech "basket of unicorns" over that stretch.Technologyread more
The president's state visit comes amid tensions with carmaker Toyota over potential auto tariffs. Trump has repeatedly threatened Japanese and European carmakers with tariffs.Traderead more
When commercial real estate investor Manny Khoshbin spent $2.2 million on the fastest production car in the world, he had no idea it would very quickly also become the...Autosread more
The IRS is about to release a new draft of Form W-4, which will more closely reflect the changes stemming from the Tax Cuts and Jobs Act. For workers, that means they'll need...Personal Financeread more
The Mega Millions jackpot has spilled over $400 million. It would be the ninth largest winning since the game began in 2002.Personal Financeread more
Trump was speaking at a meeting of Japanese business leaders in Tokyo during his state visit to Japan on Saturday.Marketsread more
The biggest U.S. gasoline price surge in years is running out of steam just in time for the start of the summer driving season.Energyread more
The federal minimum wage has remained $7.25 per hour since 2009. But several states, and even some companies, have since taken matters into their own hands to pay employees a...Workread more
Stocks rose on Friday, but notched weekly losses as investors worried the U.S.-China trade war is hurting economic growth.US Marketsread more
The recent rally to record highs in U.S. stocks may feel like reason to celebrate, but one investor suggests a better bet may be overseas.
GMO's Catherine LeGraw believes that while U.S.-based stocks tend to be of a higher quality, investors can find far more affordable deals in emerging market equities.
"We have historically wide spreads across equity markets. You have a great opportunity to concentrate your investments in the cheaper areas; I'd primarily highlight anywhere outside the U.S.," Legraw said in a talk with CNBC Pro. "Europe, Asia, Japan for the developed markets, and in particular, our favorite group of stocks, the emerging markets."
"Avoid the U.S. It's done the best and today it's the most expensive."
Legraw, whose investment strategies are based on seven- to 10-year time frames, conceded that while GMO's models have warned investors away from expensive American stocks, U.S. equities have generally outperformed the rest of the world within the past several months.
But the obsession with U.S. growth stocks leaves behind far better deals overseas, LeGraw said.
"Even if you think growth is going to be great in the future, you have to pay a massive premium to invest in U.S. stocks today," she said. "So we think you're much better off buying emerging market stocks at a roughly 50 percent discount to the U.S. equity market and capturing a huge margin of safety."
The December 2019 price-to-earnings ratio of the iShares MSCI Emerging Markets exchange-traded fund on a forward-looking basis is 10.8 as of Sept. 21, the S&P 500's ratio hovers at 16.5. The tech-heavy Nasdaq Composite's December 2019 ratio sits at 21.2.
LeGraw is a member of GMO's Asset Allocation team. Prior to joining GMO in 2013, she worked as a director at BlackRock. Previously, Ms. LeGraw was an analyst at Bear, Stearns & Co and she is a CFA charterholder.
As of March 2018, GMO had $71 billion in assets under management.
See here for the full CNBC PRO report and interview video.