In their recent interview with Advisor Perspectives, the team at Tweedy Browne explained why price matters again and how the future is bright for value investors. Here’s an excerpt from the interview:
Bob Wyckoff: We’ve been through a 10-year period, going back to 2012, that’s been a very tough stretch for value investing. That directly relates to the environment of zero to negative interest rates and the untethering of investor perception from fundamentals. We would appear to be on the flip side of that now.
We have increasing inflation and rising interest rates. As I mentioned previously, price matters again in investing.
That serves the interests of value investors. It gives me and my colleagues great optimism. When I think about our funds in particular, their focus to a great degree is outside the United States. The returns over the last decade for non-U.S. equities have been way below the returns for U.S. equities, which was driven in large part by big tech in the United States.
The areas where our funds are shopping today – places like China, Japan, and Europe – are, in our view, home to some of the cheapest stocks in the world.
If valuation indeed matters again, which we are confident is the case in a rising interest rate environment, we have great hope for the future returns of our funds, both relative and absolute.
You can read the entire interview here:
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