Odd Lots Why Value Investing Has Been Doing Terribly
Sep 2, 2019
Chris Meredith, Co-CIO of O'Shaughnessy Asset Management and a value investing expert, dives into the challenges traditional value investing faces today. He discusses how high-flying growth stocks have outpaced this historic strategy. The conversation highlights the nuances of value investing, from identifying genuine value stocks to understanding economic moats. Meredith also examines whether current downturns signal a temporary cycle or a deeper structural shift in the market, leaving listeners with thought-provoking insights on the future of investing.
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Historical Parallel to Value Underperformance
- Value investing has underperformed since 2007, prompting a search for historical parallels.
- A similar period occurred from 1926 to 1941, marked by technological shifts and value underperformance.
Technological Revolutions and Market Impact
- Technological revolutions, like the rise of automobiles, impact socioeconomic paradigms and capital deployment.
- The 1920s saw manufacturing stocks outperform, mirroring today's tech stock dominance over financials.
Value vs. Growth Stock Mechanics
- Value stocks offer returns through multiple expansion or earnings growth, often experiencing short-term declines before recovery.
- Growth stocks, like Amazon, sometimes live up to their potential, justifying high valuations over time.
