In their latest Q4 2021 Market Commentary, Tweedy Browne explain why price is once again starting to matter in investing. Here’s an excerpt from the letter:
The last five years have been extraordinarily difficult for true value investors. Zero interest rate policies have a way of gumming up the pricing mechanism for risk assets. And on top of everything, value investors had to face the stay-at-home economy sparked by Covid-19, which added only insult to injury.
It is no wonder that, with all the stimulus at the ready and extra time that investors had on their hands, speculation abounded. Big US-based tech stocks and their growth brethren were the overwhelming beneficiaries. Redemption, however, may finally be at hand for more price sensitive investors.
As we mentioned earlier in this commentary, with inflation and interest rates on the rise, big US tech stocks and particularly more speculative tech stocks appear to be in full retreat, and the “great rotation” from US based growth stocks towards more value oriented global equities appears to be accelerating.
While it’s very early in the year, if this realignment holds and continues to gain momentum, price will once again matter in investing. It’s about time.
You can read the entire letter here:
Tweedy Browne Q4 2021 Commentary
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