In his recent interview on the Capital Allocators Podcast, Jeremy Grantham explains why we are going to have a very big reversal from growth stocks to value stocks. Here’s an excerpt from the interview:
A few years ago I debated Jim Grant, who called me an ‘apostate’ amongst value managers for hedging about, this time is different. I maintain that the four most dangerous words, this time is different, should be replaced by the five most dangerous words which is, this time is never different.
That is a very dangerous idea to think that you can never have important permanent changes. And I think almost everything has changed since 2000. So the certainties that we used to have no longer exist, but that was five years ago.
That was before the most massive move against value on any way you care to measure it now we are off the scale.
So I don’t think that value is as dependable and useful a weapon as it was for 70 years prior to 2000, but I think it’s a very handy weapon when you push the parameters so far that it hits historical lows against growth stocks.
So we may not snapback the 120% I would have calculated 20 years ago, but we are going to have a very big reversal in favor of value stocks sooner or later. I think we can be pretty safe about that.
You can listen to the entire discussion here:
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