Value vs growth

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SomeDude
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Value vs growth

Post by SomeDude » Sat Sep 25, 2021 10:38 pm

S&P growth and value funds tracked very closely until a few years ago when growth started going parabolic.

VUG has a PE of 40 and div of 0.5% VTV has a PE of 17ish and div of 2.1%

Anyone swapping their stocks for straight value funds right now?
Kbg
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Re: Value vs growth

Post by Kbg » Sun Sep 26, 2021 2:50 pm

SD,

There’s been a lot of research on growth versus value. I think it is accurate to say, that there is serious debate as to whether or not value investing is actually even a thing. Another line of research quite strongly suggests, that if value is a thing, Implementation in most mutual funds and ETFs doesn’t add any value and simply costs more. Having said that, when the market does break the high growth flyers normally take a larger bath than the cheaper stuff.
SomeDude
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Re: Value vs growth

Post by SomeDude » Mon Sep 27, 2021 2:46 pm

Kbg wrote:
Sun Sep 26, 2021 2:50 pm
SD,

There’s been a lot of research on growth versus value. I think it is accurate to say, that there is serious debate as to whether or not value investing is actually even a thing. Another line of research quite strongly suggests, that if value is a thing, Implementation in most mutual funds and ETFs doesn’t add any value and simply costs more. Having said that, when the market does break the high growth flyers normally take a larger bath than the cheaper stuff.
Yeah of course they're just euphemisms for characterizing a stock based on underlying factors (div, earnings growth, fwd and trailing PE, price-to-book, RoA, sales growth etc.

If you compare the two value and growth etfs that go back the farthest, it looks like value ate growths lunch during the dot com bust but then starting around the top of the real estate bubble the tide starting turning back, with so-called "growth" stocks going ballistic back in late 2018.

Any bets that this will mean-revert back to approximately 1.0 any time soon? It certainly appears that investor exuberance is really just concentrated in 15-20 big names, mostly tech. Is it time to cut them out?
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Kbg
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Re: Value vs growth

Post by Kbg » Mon Sep 27, 2021 8:52 pm

Yeah, as I mentioned. If growth is really overvalued then return to mean is a definite factor. Value crushed growth From Jan 01 to Dec 07. 6.54% CAGR to a 0 CAGR. Since then, 7.83% CAGR to 13.6%.

However, if one is going to time growth vs. value, then go all in and do it right. QQQ and IJS.
D1984
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Re: Value vs growth

Post by D1984 » Tue Sep 28, 2021 5:39 pm

Kbg wrote:
Mon Sep 27, 2021 8:52 pm
Yeah, as I mentioned. If growth is really overvalued then return to mean is a definite factor. Value crushed growth From Jan 01 to Dec 07. 6.54% CAGR to a 0 CAGR. Since then, 7.83% CAGR to 13.6%.

However, if one is going to time growth vs. value, then go all in and do it right. QQQ and IJS.
Two (possibly dumb) questions:

One, why not start with Jan 2000 to Dec 2007 instead of Jan 2001 to Dec 2007? 2000 was all-cap value's best ever year vs all-cap growth's; IIRC the same applies when comparing LCV to LCG or MCV to MCG or SCV to SCG.

Two, if I was timing them I would probably use QQQ vs RPV (i.e. a pure play of growthy large stocks vs valuey large stocks with no size variable involved as well); if on the other hand I was trying to time between LCG and SCV I might use QQQ vs the deepest value SCV available which would be RZV (unless I was willing to go active in which case there are two very deep valuey SCV funds that merit consideration too).
Kbg
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Re: Value vs growth

Post by Kbg » Tue Sep 28, 2021 6:04 pm

D1984 wrote:
Tue Sep 28, 2021 5:39 pm
Two (possibly dumb) questions:

One, why not start with Jan 2000 to Dec 2007 instead of Jan 2001 to Dec 2007? 2000 was all-cap value's best ever year vs all-cap growth's; IIRC the same applies when comparing LCV to LCG or MCV to MCG or SCV to SCG.

Two, if I was timing them I would probably use QQQ vs RPV (i.e. a pure play of growthy large stocks vs valuey large stocks with no size variable involved as well); if on the other hand I was trying to time between LCG and SCV I might use QQQ vs the deepest value SCV available which would be RZV (unless I was willing to go active in which case there are two very deep valuey SCV funds that merit consideration too).
Because that's how far their history goes back.

No comment on point two. I just took a well known SCV fund. The main point was to juxtapose LCG and SCV as a pair. If someone has other ETFs, single stocks, whatever, that they prefer/believe will do better in expressing the trade use those.

One point is pretty clear in the data...you need a SCV crap filter. Buying the S&P 600 vs. the Russell 2000 is one way to implement a crap filter. There are most certainly other options.
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