Value investing was described as “losing its effectiveness” by The Wall Street Journal on Monday. The article was published approximately two months after Goldman Sachs issued a report entitled, “The Death of Value?”
A quick glance at the recent numbers shows why such commentary is being written. For the 10-year period ending June 30, 2017, the iShares S&P 500 Growth ETF (IVW) has bested the iShares S&P 500 Value ETF (IVE). The annualized returns for the two funds are 8.8% and 5.1%, respectively. Among small-cap stocks, growth is also beating value. The iShares Russell 2000 Growth ETF (IWO) has a 10-year annualized return of 7.9% versus 5.8% for the iShares Russell 2000 Value (IWN).
The numbers don’t lie, but Wall Street is often short-sighted. Long-time value investors with good memories should be feeling a strong sense of déjà vu right now. In the late 1990s, value fund managers were struggling to hold onto their jobs. Even Warren Buffett found himself having to defend his strategy. Shifting forward to 2017, long-time value stalwart Jeremy Grantham of asset management company GMO cautioned in his first-quarter commentary, “Investors—value managers included—should brace themselves for continued higher multiples than those of the old days.” Continue Reading »
More on AAII.com
- Why Value Beats Growth: A Brief Explanation – Investment strategist Peter Berezin shared his observations on why value works better than growth in this 2016 AAII Journal article.
- The Art of Value Investing – Renowned value investors shared their insights on investing in turnarounds, selling and avoiding errors of overconfidence.
Highlights from this month’s AAII Journal
- The Four Groups of ETFs – Elisabeth Kashner of data and analytics firm FactSet uses a four-category system to better differentiate between individual ETFs that you may find helpful.
- The Individual Investor’s Guide to Exchange-Traded Funds 2017 – Our annual ETF Guide, which covers more than 2,000 funds, has been updated and enhanced with new features.
AAII Sentiment Survey
Though all sentiment indicators moved closer together, the ongoing trends of below-average optimism and above-average neutral sentiment continued. More about this week’s results.
- Bullish: 33.7%, down 2.4 points
- Neutral: 34%, up 2.2 points
- Bearish: 32.3%, up 0.2 points
- Bullish: 38.5%
- Neutral: 31.0%
- Bearish: 30.5%
Take the Sentiment Survey.
The Week Ahead
Many retailers will report earnings next week, including Dow Jones industrial average components: Home Depot Inc. (HD) on Tuesday and Wal-Mart Stores Inc. (WMT) on Thursday. Joining them will be 17 other S&P 500 companies. Included in this group is one prominent non-retailer, Dow component Cisco Systems Inc. (CSCO), which will report on Wednesday.
The week’s first economic reports will be July retail sales, the August Empire State Manufacturing Survey, July import and export prices, June business inventories and the August housing market index, all of which will be released on Tuesday. Wednesday will feature July housing starts and building permits and the minutes of the Federal Open Market Committee’s July meeting. On Thursday, July industrial production and the August Philadelphia Fed Business Outlook Survey will be released. Ending the week, the University of Michigan’s preliminary August consumer sentiment survey will be released on Friday.
Only two Federal Reserve officials will make public appearances: Dallas president Robert Kaplan on both Thursday and Friday and Minneapolis president Neel Kashkari on Thursday.
Local Chapter Meetings
AAII Local Chapter Meetings offer you a variety of presentations from expert speakers who will give you their view on the world of investing. A bonus of attending a Chapter Meeting near you is the opportunity to meet other AAII members who share your interest and enthusiasm for investing. You can even share the Chapter experience with your family and friends by inviting them to attend Chapter Meetings with you! Upcoming Meetings »