Investors might be surprised to know that Warren Buffett, perhaps the greatest investor of all time, is a big fan of indexing. For instance, “He has already declared that 90 percent of the money he leaves to his wife will be invested in Vanguard’s S&P 500 index fund.” But as Nir Kaissar, a Bloomberg Gadfly columnist points out, investors can glean insight into Buffett’s high quality and value portfolio at Berkshire. For example, the chart… Read More
After a lengthy period of underperformance, value stocks have started to rebound. And in a recent piece for Proactive Advisor, Validea CEO John P. Reese says they are now poised to outperform their pricier growth stock counterparts. Reese talks about some of the reasons value stocks have struggled over the past decade, saying that investors have been incredibly risk-averse in the aftermath of the financial crisis and Great Recession and thus very hesitant to buy… Read More
David Dreman of Dreman Value Management says, “the outlook for the market couldn’t be murkier” in a Forbes column. He notes that corporate revenues and profits for the S&P 500 are slightly down from 2014 to 2015, but that the P/E ratio for the S&P 500 is above its long-term average. Overall, he predicts “that 2016 will be a year without significant movement up or down.” Further, he recommends value stocks, particularly in cyclical, energy… Read More
Investment firm Gerstein Fisher suggests that “blending Growth and Value [approaches to investment] even in a simple 50/50 split generally offers more stable returns than either a 100% Growth or 100% Value portfolio.” They note that value has clearly outperformed over a 90-year time-horizon and that growth has provided significantly better returns over the last 9 years, while also drawing on behavioral finance literature to remind readers that “investor attempts to time markets and cycles… Read More
Patrick O’Shaughnessy of O’Shaughnessy Asset Management says “if you look historically at what broad categories do well during period of rising rates . . . value stocks tend to do well.” He notes that “this year has been the opposite story,” but with Fed rate increases widely anticipated, O’Shaughnessy says, “we would recommend that people re-position towards value stocks.” Andrew Slimmon of Morgan Stanely Investment Management says he anticipates stocks will do “modestly better”… Read More
The value premium may seem to have disappeared. Since 1926, cheaper stocks have outperformed expensive ones by 400% according to data from Normura (see graph below). Since February 2007, however, a value investor relying on price-to-book, which is the traditional measure of value and defining trait of the Russell 1000 Value Index, would not have reaped the gains that one would expect from this historical data. Why? Barron’s reports that, according to Joseph Mezrich of… Read More
It’s extremely common to hear investment commentators talk about “growth” and “value” as though they are polar opposites. But Validea CEO John Reese says not to buy that false notion. “When it comes to investing’s great ‘either/or’ – that is, the growth or value debate – you can have your cake and eat it, too,” Reese writes for Canada’s Globe and Mail. “That’s because the great growth versus value debate is, in fact, a false… Read More
Value stocks may have underperformed growth stocks for several years now, but Validea CEO John Reese says investors would be wise not to pronounce value investing dead anytime soon. “Given that it’s Halloween season, it seems appropriate that value stocks are starting to stage a comeback in the United States,” Reese writes in his latest column for Canada’s Globe and Mail. “Much like the villain in a scary slasher flick, value stocks have been beaten,… Read More
Goldman Sachs Chief Equity Strategist David Kostin says an improving economy means investors should look to value stocks.
In his latest column for Seeking Alpha, Validea CEO John Reese lays out his case for not ditching small caps despite their weak recent performance.