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2min chapter
Antti Ilmanen: The Building Blocks of Long-Run Returns (EP.202)
The Rational Reminder Podcast
The Relationship Between Value and Growth Has Increased
The relationship between verysrat rate and value has increased. The correlation used to be close to zero, an nowi it might be point three or something like that. And so right now, i think that that relationship is there until it somehow weakens one day. But for ware looking value spreads suggested there's thee's more runaway to go with thatttthe fasrig as luck compared value and growth fundament s overtime, and showed that wasn't the explanation for the thatwas.
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Speaker 1
But for ware looking value spreads suggested there's thee's more runaway to go with thatttthe
Speaker 2
fasrig as luck compared value and growth fundament s overtime, and showed that wasn't the explanation for the thatwas, that was very interesting,
Speaker 1
yes. And there are many ways of doing that. Again, like it, everyway we try with it is something, i don't know. Ye, at some points then you become more confident, you know, you rule out everything else, and then then you get te o, look
Speaker 4
looks like a bubble
Speaker 2
on rates. You gas had a paper where you found that, statistically, the relationship just isnt there, and in other samples, it just isn't there. Ye, so i kind of took that said, ok, that that's fine. The the relationship just kind of looks like it's there if you look at a pretty picture. But rates have been rising recently, and growth has been getting hammered, and values been doing, ok, it'sa, it's an, so let me say th. So
Speaker 1
it is also, it's fair to say that the relationship between verysrat rate. Messer souno, you can again, look, look at many, many different measures, but that has increased. The correlation used to be close to zero, an nowi it might be point three or something like that. But so it has increased. And i do think that it has been such a media story and investor story, that for some time, markets can act as if this relation was deep and meaning ful and is going to be there always. And so right now, i think that that relationship is there until it somehow weakens one day. And nd, and we are not were were going o have lest. But basically, this common belief that there is this pattern, i think, i think, does probably contribute to something. I mean, that that's a weird way of thinking of markets, but i think, i think that probably
Speaker 4
has been happening last couple of years that's superinteresting.
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