Tweedy Browne: Value Has Rarely, If Ever, Been Cheaper Compared To Growth

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In their latest Q2 2020 market commentary value firm Tweedy Browne discussed the rebound in U.S equities from early March, and that value stocks have rarely, if ever, been cheaper compared to growth. Here’s an excerpt from the commentary:

If you were Rip Van Winkle, just waking up from a six-month long sleep, you might think very little had changed in global equity markets since you nodded off, but you couldn’t be more wrong. In early March, it was as if a bomb went off, causing a cataclysmic decline in equity markets over a three to four week period, followed by, as Jason Zweig has observed, the largest rise for the S&P 500 in such a short period of time (almost 40%) since 1933.

The rapid rise in equity prices over the last quarter has driven valuations in some instances north of pre-pandemic record highs. This has indeed been the case for the NASDAQ index in the U.S, and the S&P 500 is just 5% off its all time high.

And this is in spite of a global economy that still remains pretty much in shambles, corporate earnings that, while in modest recovery, remain severely suppressed, private and public debt levels that are rapidly rising from previous record levels, unemployment rates in the U.S. that remain at multi-decade highs, uncertainty surrounding additional stimulus measures, and pandemic infection rates that are spiking in many parts of the world including the world’s largest economy.

With U.S. elections coming in the Fall, this is, in our view, no time for complacency. That said, in our view, value has rarely if ever been cheaper compared to growth. We have been able to prune and freshen the Funds’ portfolios at the margin over the last several months, and feel we are well positioned for whatever the markets may have in store for us.

You can read the entire commentary here:

Tweedy Browne Q2 2020 Market Commentary

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