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Macinstosh on value v growth


Guest cherzeca
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Guest cherzeca

https://www.wsj.com/articles/the-agony-of-hope-postponed-by-a-value-investor-11563109380

 

places recent underperformance of value into a historical perspective, which I find interesting.  if you haven't read mackintosh I find him to be one of the best financial journalists writing today, coming to WSJ from FT.

 

a takeaway is that growth outperformance will continue because the disruption that gave growth its juice, internet, is still creating new winners.  the historical antecedent was mass-production in 20s, which gave growth a spurt that lasted some 15 years until value companies assimilated the disruptive benefits of mass production.  the thought presented by mackintosh (or at least that I inferred) is that while value companies may have assimilated the disruption of the internet, growth companies are still riding the disruption wave.

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Thanks for the article.

 

Why do you think it suggests that growth outperformance will continue?

 

He says at the end:

 

"What keeps me clinging on to the value creed is that all of this is priced in, and then some. Back in 2007 value stocks had had a great run, and were less of a bargain compared with growth stocks than any time since the mid-1980s, according to Vitali Kalesnik, director of research for Europe at Research Affiliates. They are now much cheaper than usual compared with growth stocks (although the gap was bigger still in the dot-com bubble), so there’s a better chance that the bad news is already recognized."

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Guest cherzeca

@Paul

 

the conclusion you cite seemed to me like wishful thinking.  I thought his argument that value ends up benefitting more when the innovation is absorbed by value companies at the expense of growth companies was countered by the observation that growth continues to implement this innovation (internet) to outpace value.  I say that I inferred this, as I think mackintosh admits that he is just value to core, but that with respect to internet, "this time it's different" because the internet can favor growth over value in ways that prior innovation (mass production) did not. 

 

the article is provocative and in my view is open to a pro/con analysis.  while FANG is about to enter regulatory hell, imo, there is a good argument that their runway is longer than one might have otherwise thought

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