Ruffer: The potent cocktail putting equities at risk

Share prices are rising faster than corporate earnings to create a "potent cocktail" that could lead to disappointment in equity markets, according to Ruffer.

Ruffer Investment Company managers Hamish Baillie and Steve Russell have sold out of the "expensive defensives" that have defined the trust post-crisis, looking to cyclical names to drive returns in an increasingly beneficial market for stock-pickers.  The managers are also looking at buying into IBM, Volkswagen and energy services company Cape, which they said have cheaper valuations compared to peers. "This in no way means we are immune from stock specific disappointments, but cheaper valuations may provide some insulation; earnings can still fall but multiples are less likely to co...