There are three tactics patient value investors should implement now to prepare for overvalued markets to shift back to normal

There are three tactics patient value investors should implement now to prepare for overvalued markets to shift back to normal. Central banks have crunched bond yields to historic lows. If value investors sit the market out they earn low or negative real returns. They have also lost a reliable investment proxy - the 'risk-free-rate of return' based on bond yields - from which to assess required return and measure value. Value investors can cut the returns they expect from stocks and stay invested. But rates, markets and the $A will return to normal. To prepare, value investors should do three things: maintain high levels of liquidity; buy stocks in offshore markets with a focus on companies leveraged to Asia; and acquire Australian shares leveraged to a weakening $A. (VIEW LINK)