I came across a terrific article I wanted to share with you by the asset manager GMO on how extreme the opportunity in value is versus growth.  I’m going to share some of the most important commentaries.   “The performance of Value from 2007 to 2019 was, to put it mildly, uninspiring. This was not...Read More

As we retire or get closer to retirement, the need to generate investment income takes on a much greater importance.  Historically, it was much easier, as one could divert a larger portion of their stock portfolio into bonds, while capturing yields that might vary from 5-10%.  Those yields, combined with the nearly 40-year bull market...Read More

Sometimes it is easy to look at what is working in the stock market and assume that it is the “safe and prudent” way to invest, because it is working.  Remember that investing is about buying securities at a discount to intrinsic value based on a fundamental analysis that suggests the securities should appreciate over...Read More

Over the long-term, the best performing stock strategy has been owning the cheapest companies from a valuation perspective.  Enterprise/value/EBIT, divides the (market cap+debt-cash by pretax operating income.)  An EV/EBIT of 5, means that if you buy a business for $1 million dollars, you are generating a 20% pretax return, or $200K.  That sounds pretty good...Read More

I’ve been writing to you for quite some time about the massive paradox between growth and value stocks.  The largest growth companies have become so big that they now represent the largest portion of the indices in history.  Conversely, value stocks have remained in the penalty box and are trading at very cheap valuations.  The...Read More

I’d like to draw your attention to the images above.  The graph on the left highlights the sharp divergence between momentum growth stocks and value stocks.  That is a 55% divergence and is one of the most shocking divides between growth and momentum in history, if not the most.  The only comparable is during the...Read More

As the economy reopens, cyclical value stocks are starting to perform a lot better. Remember, that what we experienced was something that has never happened before, with the major economies across the globe shutting down due to a virus.  I’d suggest the lock-down was more like the black swan rather than the pandemic, which are...Read More

This year has been wild in many terrible ways.  One extremely painful phenomenon (for a value investor) has been the massive growth outperformance relative to value.  Coming into the year, we were at the widest relative spread between growth and value since 2000.  After the pandemic tanked stocks more closely related to the economy, the...Read More

2020 has seen a major disconnect between growth and value.  In the first quarter, the Russell 1000 Pure Growth Total Return index returned -13.6%, while the Russell 1000 Pure Value Total Return index returned -35%.  If you think about the companies that are most negatively impacted by the bizarre nature of this crisis where economies...Read More

The Covid-19 health crisis continues to evolve globally, and slowly we are learning more about the virus.  There have been quite a few serology studies in various regions of the country, where they are examining how many people possess Covid-19 antibodies.  The results of the studies seem to indicate that the true number of infected...Read More