Tweedy Browne: Rotation To Value Will Continue

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In their latest Q2 2021 Market Commentary, Tweedy Browne says that the rotation to value is set to continue. Here’s an excerpt from the commentary:

Looking forward, the question of the hour for many market observers is whether this rotation into value, which began in November, will be sustainable.

While your crystal ball may be as good or better than ours, we are hopeful that if the past is prologue, this rotation should have legs — particularly in light of better relative valuations for value stocks, prospects for continued fundamentally strong economic growth, and the likelihood of a continued rise in inflationary expectations and interest rates, which, relative to value, tends to disproportionately hurt longer duration risk assets such as growth and technology stocks.

However, the tug of war, which was clearly at work in the 2nd quarter, is likely to continue, and the progress of value stocks might take place in fits and starts. Even so, we can’t help but believe that this pivot in global markets remains durable. It is certainly long overdue.

While the Funds remain a mix of some higher quality long-term compounders as well as more cyclically-based companies (all purchased at discounts from our estimate of their intrinsic values), we are hopeful that they should continue to be beneficiaries of this change in our markets.

You can read the entire commentary here:

Tweedy Browne Q2 2021 Market Commentary

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