Small and Passive is Better in Money Management

A recent S&P report offers deep-dive analysis into mutual fund performance over the past year versus various benchmarks, according to a Bloomberg article by columnist Barry Ritholtz. “Growth stocks are trouncing value,” Ritholtz writes. “Small caps are beating large. And more professional managers are beating their benchmarks now than a year earlier.” Here are some highlights of the findings: For investors in U.S. equity markets, small-cap stocks showed the strongest performance, gaining 20.5 percent, followed by… Read More

Rotation from Growth to Value Might Not Be Imminent

Although some investors are making the case that “stock market leadership should be passing from excellent-but-expensive growth stocks to cheaper value stocks more tied to a strong U.S. economy,” any lasting rebound of value is likely to require a “period of tougher overall market performance for a good while longer,” says a CNBC article. The article asserts that growth stocks represent too large a share of the market to “retreat quietly while value moves to the… Read More

Value Versus Growth in Emerging Markets

“Emerging markets are flashing warning signs, but don’t tell that to value stocks,” writes Bloomberg columnist Nir Kaissar, who adds, “To some investors’ surprise, value stocks are holding up better than growth.”   Theoretically, Kaissar explains, that’s not supposed to happen. “Value stocks, after all, are cheaper than growth for a reason: They represent companies, and sometimes whole sectors, that have fallen on hard times or are struggling to grow.” But in reality, he says,… Read More

Relative Performance of Growth vs. Value Stocks

A CFA Institute article poses the question: does the long run of growth stock outperformance suggest that value stocks must be due for an uptick? Although growth stocks have outperformed value since the end of the financial crisis, the article notes, the data could be misleading because of the “selective and short-term nature of the time frame.” If you look back to the bursting of the tech bubble in 2000, it argues, a different scenario… Read More

Value Returns Could Improve, But Nobody Can Predict When

Given today’s environment of rising interest rates and increased volatility, the market appears to be at a “crossroads,” and the value investing strategy could be poised to make a comeback, writes Wall Street Journal columnist Jason Zweig. He warns, however, “you would be foolhardy to believe anyone who claims to be able to predict precisely when it will happen.” Since 1962, value stocks have (on average) outperformed growth stocks by 6.1 percentage points during the… Read More

Value May Be Poised for Performance Over Growth

As investors are drawn to defensive investments, value stocks may make a comeback beginning this year, says one portfolio manager at Perkins Investment Management in Chicago. This according to a recent article in MarketWatch. The manager, Justin Tugman, says that a combination of higher interest rates and faster inflation bodes well for value strategies, and a potential trade war would “only add fuel to the fire.” While growth has been the better strategy in the… Read More

Stock Market Lessons Learned in 2017

By John Reese (@guruinvestor) — Over the past twelve months, we’ve seen the bull market continue to trudge ahead with highs in many U.S. indexes and growth in various sectors and industries. With the news of major tax reform comes optimism for continued corporate earnings strength. That said, however, there are also growing concerns regarding an overvalued market and a potential correction. Let’s review what we’ve learned over the past twelve months: Bull markets don’t… Read More

Undervalued Value Stocks Could Rebound

This year has seen the largest divergence between the valuations of growth and value stocks since the dot-com bubble, according to a recent article in The Wall Street Journal. This, the article says, has left investors “searching for ways to pinpoint when preferences will switch back from growth to value.” It could also signal either a market peak or a “realistic assessment of dismal log-run economic growth prospects, depending on your view.” According to Gerard… Read More

Why Value Investors Need “Mental Toughness”  

At the end of the Super Bowl, a jubilant Tom Brady attributed the Patriot’s win to the “mental toughness” the team had demonstrated all year–which, no doubt, came in handy when they entered the fourth quarter trailing the Falcons by ten points. Unless we’re talking about basis points, things would be pretty dismal for any investor entering the fourth quarter down by ten. But the idea of mental toughness applies to investing as well as… Read More

Investing Lessons from 2016 that Ben Graham May Give a Nod To

It’s the time of year when holiday party-goers lament their seasonal overindulgences and commit to “turning over a new leaf” on January 1st— promises to hit the gym every day, clear the pantry of junk food and turn off devices during family time are among the hopeful resolutions traded over hors d’oeuvres and prosecco. It’s also a time for reflection on the year that’s passed and setting in place a plan for the year ahead.… Read More