In June of 2019, we put together a brief presentation titled, "How We Look at Growth vs. Value: A Long-Term Perspective”. In it, we sought to explain why we believe value investing makes sense long term, despite occasional periods of significant underperformance.
We pointed to the late 1990s as one such period where value stocks notably lagged their growth counterparts. As the environment got particularly frothy, growth’s outperformance became particularly pronounced. Many were pronouncing value investing “dead”, arguing fundamental analysis was no longer necessary to be successful in markets.
Yet after a period of marked success, growth stocks quickly gave back their outsized returns, and value once again made sense, at least until the Global Financial Crisis. Since that time, growth stocks have once again led the market, driven by stimulative monetary policy and seemingly unshakeable confidence on the part of consumers, corporates and investors.
In wake of the volatility seen earlier this year, the lingering effects of the COVID-19 Crisis, and the dramatic recovery seen since March, we felt now was as good a time as any to revisit our analysis. Our latest prestation, "Growth vs. Value, Revisited", can be found here.