He told the conference: "This might be the right thing to do - portfolios might be perfect for some people. But I think this is not the case for most.
"One of the factors here could be human inertia. We are very prone to it."
Correlations
Even more insidiously, even those who want to protect themselves through careful allocation strategies might find it "surprisingly hard for them to do so".
He referred to the IA mixed investments 40-85% sector and showed the correlations between the largest names in the sector, and then widened it out across the whole.
"Consider the correlations", he warned. "Correlations appear to be approximately 90-95 per cent.
"We’ve had such a strongly trending market that the people out of kilter (often the value managers) tend to shut down and clients switch.
"More flexible mangers will shift to be more in keeping with the tide, and therefore multi-asset portfolios may in practice be far less diversified than they should be in real time."
There are funds out there with materially different correlations, he said, but this is where using financial advisers to help find the right solution is paramount.
Good news?
He returned to the point about valuations, telling the room: "There is some good news. The opportunity set is still wide. The valuation spread is throwing up some interesting opportunities.
"The solution? It really pays to get back to basics."
Avoiding the hype (which is currently about AI), he urged those present to keep perspective and consider valuations, pointing to stocks such as Costco - in which Orbis does not invest - and Thomas Peterffy's Interactive Brokers, the US brokerage firm, which is trading on 14x earnings and is "emblematic of a great business".
Bottom up, he said, is where he finds the value in a different sort of AI - the "awesome industrials".
He added: "It’s easy to feel fearful in the moment. But zooming out you see a much smoother ride. The battle we face as investors is to see what sort of perspective to apply to any given situation.
"Yes the Amazons and the current market leaders have had a fantastic 10 years in an era of emerging technologies. But should the regime change happen, we need to be on the right side of valuations."
simoney.kyriakou@ft.com
