NEWS & VIEWS
THE BUZZ
Keep a cool head when it comes to sustainability
The history of investing is littered with periods when investors have become irrationally enthusiastic. For example, in the 1970s they became transfixed by a group of “bulletproof” stocks, known as the Nifty 50, for which no price was deemed too high. The late 1990s saw the dotcom boom.
The important thing to note is that the investment theme underpinning these moments makes perfect sense; it is the market excess surrounding them that is irrational.
Today’s hot story is sustainability. There are many good reasons to consider ESG factors, but none to disregard the fundamentals that drive returns.
Share prices reflect measurable factors. First, expectations about future earnings growth and, second, the price that investors are prepared to pay to participate in that growth. Add in a third key factor, the weight of investment money, and it is hardly surprising that shares spend almost no time at the
