Aswath from NYU Stern wrote an excellent piece a month or so ago about why value investing needs to evolve and it’s hard to argue against. I keep hearing “this appears to be the start of a rotation into value” every few months, but it never is, and there is always another explanation. For example, last week after the vaccine news it was “rotation” but really it just seemed like profit taking in winning stocks (biden tax became a real risk again due to Georgia) and selling growth gains for value stocks to maintain equity exposure. That’s not a long-term rotation, it’s an isolated episode that’s short lived, and it happens time and time again. At this point the fed is pumping tons of money into corporates (we’ll see if that continues after today’s news), rates are going to have to stay low for awhile & they’re pretty fucked in Europe, the deficit keeps growing and it isn’t a great sign for inflation, I mean everything points to continued strength in growth. Furthermore, you look at the real “zombie companies” and, sure, there are plenty of debt darling growth names, but my god there are tons of value sweethearts like AT&T with absurd capital structures, that are not going to suffer from increasing rates less than a growth name like Facebook which is cash flush. I also have been hearing value managers say for years that we’re in a bubble and when shit hits the fan it’s up. Well? It hit pretty hard if you ask me and they look like idiots. I feel like GARP is a much better approach to value investing these days (obviously not value, but I feel like it’s the modern equivalent). The fact is, we all have access to financial data, ratios, and estimates. You don’t need the slide ruler and ledger paper to build a model, you need excel, copy/paste, and an undergrad in finance (if that). There isn’t an information edge anymore, it’s much more so about seeing the big picture and understanding comps. At what point do we say it’s been a good run and stop pretending it’s coming back after decades with world altering technology?#finance #finance #finance
If you think there isn't an information edge it's just because you're not getting the information.
It is statistically likely that over a given period a single factor (small, value, market...) one of them may be negative. However, it is very unlikely for all 3 factor premiums to be negative at the same time. Diversify across factors, rebalance. When value outperforms the market, you will be glad you did
Tech Industry
Yesterday
321
Urgent Help: Apple vs JioCinema vs DP World vs Tekion vs Nutanix
Tech Industry
Yesterday
1705
Cute girl on the floor
Tech Industry
Yesterday
460
Modi is the worst dictator!
Tech Industry
Yesterday
929
Update: Trans Coworker Stealing Breast Milk
Tech Industry
Yesterday
2900
The job market is absolutely brutal right now
Yeah, too slow...