Is Value Investing Dead?

[randomep]

 

We are in a low-growth world. All the low lying fruit is taken. GDP growth is slowing everywhere. So how can we get outsized returns in growth stocks if the fundmentals don't support it?  I think that's why we see such a small breadth of growth stocks.  It's all the likes of the FANGS and unicorns.  Common sense tells me these stocks will not make outsized gains on average.  Maybe people who buy growth see this and relying on the greater fool theory.

 

On the other hand the wild gyrations will constant cause non-growth stocks to be very undervalued.

 

And I heard that US total wealth is something like $60Trillion, but the stockmarket is less than $20Trillion. So probably most of that is real property. What do you consider a real property as an investment? Growth or Value? Would anyone say real estate is a growth investment???

 

 

 

 

[LR1400]

Whether real property is a cigar butt or high quality depends on the location and class of property.

 

I look at them like a blend of a bond and a stock. Personally, I prefer to lean toward looking at them as a bond.

 

There are shitholes that provide solid cash flow and little price appreciation - similar to a cigar butt in some ways. There are ones that provide massive price appreciation potential but little to no positive cash flow - an AMZN tyow scenario. Then there are those that are in between, which are probably the best investments, but harder to find. The latter scenario is similar to a workout. Find a class C property in a solid market and fix it up to class B type standard. Or get a deal on a class B poverty in distress, etc.

[bbarberayr]

randomep,

 

I wouldn't get so down on the prospects for growth in earnings.  We've been working off the financial crisis for a number of years, but things looking forward to look a lot better.

 

Things that are positive include the improving housing market, improving job market and wages, technology innovation, improving economies around the work, etc.

 

Even inflation appears to be going up, which would be good for nominal GDP.  Assume we can get to 2.5% inflation and 2.5% GDP growth.  That's 5% growth in dollars which flows into company revenues.