In his recent article on RealClear Markets Ken Fisher provided some great insights into why value investing isn’t dead, but added that no sector is ever ‘due’ for a rally. Here’s some excerpts from the article:
Depending on who you ask, value stocks are set to soar….or dead as a doornail. Value’s tub-thumpers say growth stocks’ decade-plus dominance can’t endure—particularly with value’s penchant for zooming early in bull markets. Disbelievers argue Big Tech’s supremacy alongside private equity and indexing’s rise seal value’s casket. Wrong and wrong. Value isn’t dead. But the 2020 bear market’s peculiarities make a near-term comeback unlikely.
Remember: Value and growth leadership doesn’t change because one style is “due.” Nothing is ever “due.” Nor does one or the other “die” from being out of favor. Growth/value leadership shifts when fundamental drivers impacting companies’ outlooks change materially. Understanding that value stocks are unlikely to soar without a big credit boost gives you an advantage over those who see an imminent rebound—and those who think one will never come.
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