The odd sweeping generalisation helps trim the fat off of life, but often risks simplifying things that need a bit more thought. Saying the market is expensive is one. It’s fashionable. Now, the market is expensive, almost on any valuation metric you care to consider, but within the market there have been some astonishing moves, leaving battered share prices and many a mangled valuation. The year-ahead for markets presents a ball in a tricky lie: searing hot house prices, groaning deficits, eye-watering debt, runaway inflation and a central bank that is variously described as being a bit ‘behind the curve’ to one responsible for inflating the biggest asset bubble in modern history. And whilst the mandarins continue to buy bonds, the collective voice has turned. Hardened. We now read the balance sheet is way, way too big, and rates could be going up quicker than anyone – even with the recent repricing – expects. The Taylor Rule – if still relevant – sits north of 8%, on a record deviation from the official benchmark rate. With attention turning from the macro to the micro, as earnings season gets going, the mood music may pick up, and sell-side upgrades may ensue as companies report another quarter of 20%+ earnings growth. This, though, won’t last. Leading economic indicators – like housing – point to a slowdown. A slowdown post the pomp and swagger of an economic awakening was inevitable, but tighter policy is likely to require a different setting to recent years. Hence back to a market that looks rich versus history, but when stripped down, is literally littered with opportunity. One area beginning to court interest is some quality names in the software space that have been caught short in the recent reappraisal of the monetary mood. Not profitless concepts, but real companies, with real cash flows and market leading positions. Valuations may have more air to come out, but some stocks are starting to gleam. Of more immediate interest are companies that can lean into falling PMIs, like a Fiserv, a quality payments business that we believe is vastly underappreciated by the market and trading at a significant discount to a bloated S&P. As retail bought the glimmer-glimmer of profitless tech, there are many grown-up businesses that are more than capable of delivering into an economic slowdown. You just have to know where to find them.