In an interview with Yahoo Finance last December, Ariel Investments Vice Chairman of Investment Group Charlie Bobrinskoy discussed a variety of factors that will fuel the outperformance of value investing strategies in 2021.

Here are some excerpts:

• “Value crushed growth” in the fourth quarter of 2020, said Bobrinskoy, noting that the Russell 2000 index rose by 30% compared to a 10% uptick in the S&P 500. He said, “This will absolutely continue as value stocks are trading at much more reasonable multiples than growth.”
• A strong economy in 2021 will “be good for value,” he said, adding that inflation and higher interest rates will “be bad for growth stocks.”
• “Value is only just starting its outperformance,” according to Bobrinskoy.
• The $900 billion stimulus package currently under consideration is “massive” and will have “a significant impact on the economy.” He adds, “there are a lot of signs that when we get to the other side [of the pandemic] we’re going to have a stronger economy.”
• Regarding some concerning economic indicators including consumer confidence, personal spending and personal income (which have been down), Bobrinskoy said this is understandable given the second wave of coronavirus cases, particularly in California and New York. He argues, however, that the continued vaccine rollout program along with passing the peak in hospitalizations will likely lead to a better outlook in a few months. Bobrinskoy predicts seeing “positive economic numbers in March, April and May.”
• When the discussion turned to Ariel’s penchant for Goldman Sachs stock, Bobrinskoy explained that late in 2020 the stock was “incredibly cheap,” trading at less than book value and 9 times earnings. “It ties into this concept of value,” he said, adding, “If you can buy an investment bank whose book is made up of tradeable, liquid securities for less than the value of its assets, that’s just an amazing opportunity.”