GMO’s August 2025 asset allocation report dissects the dramatic rally in U.S. equities following April’s market bottom, emphasizing risks posed by surging retail-driven speculation and distorted valuations.
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Since April 8, the S&P 500 rebounded 27%, while speculative segments like meme stocks and unprofitable tech soared over 100%, fueled by aggressive retail buying.
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Momentum and low-quality stocks led the rally, suggesting rising fragility as valuations stretch well beyond fundamentals.
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GMO proposes equity dislocation and quality-based long/short strategies to exploit mispricings or protect portfolios against correction risk.
Curious how to rebalance amid extreme sentiment? Review the full paper for actionable positioning strategies.
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