What’s A Value Investor Supposed To Do?

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In their recent episode of the VALUE: After Hours Podcast, Taylor, Brewster, and Carlisle discussed What’s A Value Investor Supposed To Do? Here’s an excerpt from the episode:

Tobias: Speaking of turning your brain off, let’s just do my little contribution. GMO, noted value shop, has been crying about how expensive the market is almost as long as probably longer than I have at the same period of time. There are no winners here. They point out that we’ve had this value guys really long period of time where nothing really worked, had this brief rally I don’t know when that started, the reopening trade like September last year, ran through to about March. Six months is a long time in this game. That’s fruit fly value. But then more recently since March, for the last quarter, we’ve backed off quite a lot and they say 742 basis points, which is 7.5%. That’s quite a lot of– a long way to fall back and they say, “We will be–” [crosstalk]

Jake: Was that just flat though and the other things went back up? Do you happen to know, is that matters a little bit, too?

Tobias: Yeah, I can talk to ARKK, because that’s what I tracked pretty closely, the A-R-K-K. That bottomed under 100 bucks and I think it was back– it might have got back to $130, and I don’t think that value backed off much through there. I think it was just flat. So, probably you are right. It’s probably more a bounce in the growthier names than it was and that was on the back of the growthier names getting– Yeah, they are [crosstalk] 50%.

Bill: But they had to pull back.

Tobias: Yeah.

Jake: Yeah.

Bill: Stuff like Snow’s up, I think I saw 40%, and Spotify ripped and–

Tobias: From a sort of recent base. Yeah.

Bill: Bottomed. My beloved Twitter’s ripped.

Tobias: GMO’s got this piece out, Value Versus Growth Reversals, and the headline is basically The Best Three-Year Period For Value Versus Growth, which was February 2000 through to February 2003. Value suffered some of its worst drawdown through that period, and they’ve got this nice chart where they show 4 of the worst 10 occurred during that three-year period. What the message that they’re saying is just when it turns around and this is volatility, is volatility in both directions up and down, so you shouldn’t necessarily get discouraged. But I think that the much, much broader takeaway from that is in the short term, markets are just completely unpredictable. You’re going to see a lot of moves up and down that make no sense whatsoever, because they don’t mean anything. It’s because they’re just completely noise. Ultimately, ultimately, ultimately-

Jake: [laughs]

Tobias: -and I don’t know when that ultimately comes in, kingdom come, the heat death of the universe, value starts outperforming again, but I think ultimately, it does track along with fundamentals, and I feel the fundamentals I think for value portfolios still look really good.

Jake: So, you’re telling me there’s a chance.

Tobias: There’s a chance. There’s a chance, baby.

Jake: I read you.

Tobias: I think we’ve turned around at the end of June. I think we’ve been doing a little bit better the last two weeks.

Bill: I don’t know.

Jake: Do you think just for your mental health, and I’m saying–

Tobias: I should take a step back? Is that what you’re saying?

Jake: Well, I was going to say, your mental health, the more broader you but also you, Tobias Carlisle, [laughs] that maybe following every single one of these ups and downs might be just a good way– [crosstalk]

Tobias: It’s a fool’s errand.

Jake: To wear a fella out.

Tobias: Yeah, 100%.

Jake: Yeah.

Bill: But what are you going to do if you’re Toby? It’s his job. He’s got two value ETFs. So, what else you can follow? You should write a book about the invincible investor. That’s what you should do.

Tobias: What I have noticed–

Jake: Is Churchill in it?

Tobias: [laughs]

Bill: He is now.

Jake: Okay. [laughs]

You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:

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