The Value Opportunity

October 20, 2016

I’m a believer in the value approach to investing – not that I don’t also recommend growth investments – its just the value approach makes more sense to me and, historically has outperformed.  This link is an interview with Charles Brandes, one of the great value investors of our time:


“Despite being one of the longest and strongest bull markets of the post-war era…the U.S. stock market is still at worst fairly priced and even cheap relative to its post-war trendline. By comparison, the other two major bull markets since WWII (i.e., during the 1950s–60s and again in the 1980s–90s) both ended only after U.S. stocks rose significantly above trend for several years…

“Indeed, the total U.S. stock market is currently priced comparably to the early-1950s or the early-1980s. Perhaps equally important, even the popular S&P Index is not nearly as richly-priced today as it was in the 1960s or the 1990s.”

~ Jim Paulsen ~
“Is the trend a friend?”
August 31, 2016

Value vs Growth

April 8, 2016

According to a recent article in Morningstar – I’m vexed!  My investment strategy is value biased.  I recommend investment managers for my client portfolios that purchase shares at a discount and wait patiently until the market discovers their real value and rise.  The value investment approach has been out of favour now for about 10 years.  So what to do?

Since about 2005 a growth investment style out-performs a value style.  A growth style focuses more on various growth factors (revenue, profit etc.)  We are now seeing value investors switching to a growth style – likely because they have lost patience.  Once again investment behavior will be the determinant of investment success or failure.

History tells us when the masses move in the same direction; ensure you move in the opposite.  The chart below is a relative wealth chart and plots the Russell Value index versus the Russell Growth index.  When the line points down, a growth investment style is winning and when it points up, a value investment style wins.  Given what goes down must come up – I’m betting value is poised to recover.

Russell 3000 Value vs Growth