Is Value Investing Dead?

[BT63]

I don't think value investing will ever be dead but there are often long periods of time when there's not much value to be found.

[tjh290633]

I would have thought that the time, when the market is unusually depressed, is ripe for the value investor. It is just a case of the time required for the value to be delivered.

TJH

[Hariseldon58]

Value is unlikely to ever die, but you need to consider how you define value.

The situation for conventional Value ( including Equity Income which is a cousin of Value) has been dire in the years prior to Covid and there is no sign of it changing after Covid.

QE and artificially low interest rates seem to have allowed some zombie companies to survive, a little investment Darwinism is occasionally useful ! A company that is genuinely growing at an attractive rate, is very valuable on a discounted cash flow basis in a time of low rates. Companies that provide 5% dividends should be incredibly attractive in an era of 10 year gilts around a 1/10 of that level but they are not.... perhaps because the levels of debt held and other factors that make the consensus in the market that the yield is not sustainable. Easier access to value from Smart Beta, the price has been bid up so that its not cheap enough....

Perhaps value is a great company at a good price rather than a company in a dying industry that is cheap but may be a value trap.

FWIW I have rowed back heavily on Smart Beta, allocating instead to Investment Trusts that have 'distinctive' management, ITs which have a high discount despite recent changes in management that have a far more mainstream approach etc, plus the passive element, with a few contrarian twists on regions.

So I think that Value is still viable but it may not ben the traditional value approaches of low P/E, low P/B, high Yield etc

Time will tell

[LooseCannon101]

I believe John Maynard Keynes once said that 'Markets can remain irrational longer than you can remain solvent.'

Making bets, especially with borrowed money, is particularly risky over the short term IMHO, but investing for the long term in great companies at fair or preferably cheap valuations, will always make good financial sense. Great companies in the current crisis, might mean - those that have low borrowings, strong brand loyalty, low operating costs, and ability to increase revenue and margins above their competitors.

Value Investing has worked for a certain Mr. Buffett for the past 50 years - why not for another 50 years?

[kempiejon]

Value Investing has worked for a certain Mr. Buffett for the past 50 years - why not for another 50 years?

Because Buffett was born in something like 1930.