The long period of low interest rates is the first culprit to blame for the demise of value investing, according to AB Bernstein.
Technology has disrupted industries in a way that may permanently destroy "moats" that used to exist around certain industries, the analyst said.Brendan McDermid | ReutersThe classic factor investing strategy of picking stocks with cheap book valuation, embraced by the legendary, has become increasingly irrelevant thanks to central banks and technology, according to AB Bernstein.
"Duration has been bid up as rates are so low," Inigo Fraser-Jenkins, Bernstein's head of European quantitative strategy, said in a note on Wednesday. "Thus, the outperformance of value might require higher interest rates, which could be structurally difficult to achieve in the foreseeable future. In this sense one could say that QE could have stopped the mean-reversion process that usually occurs over the economic cycle.
Value investors also got burned by the massive rotation to growth stocks as appetite for fast-growing companies like tech surged. The trend favoring growth over value still persist in recent years as value names have underperfomed in the past five years.
Paying less than what something is worth can’t be dead. Same with overpaying. Just periods of time where there are more opportunities to do one or the other.
Anyone else think articles like this are a sign of the top? The same claims were made at the top of the dot com bubble... I’m sure this time is different though.
Fascinating perspective on value investing. It is a more fundamental take on the effect of prolonged low interest rates in stock valuations...I wonder what the technicians would say?
Always the word interfence play appears seeing what condition exists as interfence direction to produce another world never judges what is there
Articles like this tell me it’s poised for a comeback.
Get rich quick
Is this a contrarian indicator?
Finally, the signal that value will work from here
Wrong. As usual
danielle_town might be worth a discussion on the podcast, especially part about technology destroying moats.