During his latest Q4 2022 Earnings Call, Prem Watsa explained why value oriented stocks are coming to the fore. Here’s an excerpt from the call (H/T Seeking Alpha):
Watsa: As I’ve said previously many times, long-term value investing has gone through a very difficult time for about a decade now. Just to quote what I said in the past, valuations of value oriented stocks versus growth stocks, particularly technology have never been so extreme, exceeding even the extreme for the dotcom era in 2000.
As the economy continues to normalize, we expect a reversion to the main with value-oriented stocks coming to the fore.
We continue to believe our common stock positions are very undervalued. I remind you that in the years 2000 to 2002, in that downturn, most stock market indices were down about 50%, but our portfolio was up 100%.
In 2022, particularly in the third quarter of this year, as we discussed in our third quarter call, technology stocks including FANG stocks and Microsoft have come down significantly.
From its high-end 2021, currently Alphabet is down 37%, Amazon 48%, Facebook 54%, Microsoft 25%, Netflix 48%, Tesla 50%. Only Apple has dropped by less than 20%.
Of course, smaller tech companies like Zoom and Shopify are down 70% plus. And if history is any guide, there is more to come. I will note to you that the NASDAQ dropped 50% in 2000 and then dropped another 50% in the next two years.
You can find the complete transcript at Seeking Alpha here:
Fairfax Financial Holdings Limited (FRFHF) Q4 2022 Earnings Call Transcript
You can listen to the entire call here:
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