As you make your investing plans for 2021 and beyond, bolstering the value side of your portfolio is worth considering. Value stocks appear to be one of the few underpriced areas of the U.S. equity market, as Morningstar s Dave Sekera and Amy Arnott have recently noted in separate articles. The extreme value-growth spread has been a noted feature of the market for a number of years, for reasons not fully understood, but believers in mean-reversion would expect that pattern to shift at some point, perhaps in an extreme fashion. GMO s Ben Inker, for instance, argued in a recent letter to investors that no matter where you look, no matter how you slice it, value looks cheap, while DFA s Gerard O Reilly made a similar case for value on a recent episode of Morningstar s
With Vaccines Arriving, Value Investors Try for a Comeback
After years of lagging performance, practitioners of an old approach to investing are hoping their time is nigh.
A Banner Health employee prepares a dose of the Pfizer-BioNTech Covid-19 vaccine at the Arizona State Fairgrounds in Phoenix.Credit.Adriana Zehbrauskas for The New York Times
Value investors have had a tough decade, with growth stocks stealing the investing show.
Overall, this year has offered little encouragement. In 2020, the Russell 1000 Growth Index returned 38.49 percent, while the Russell 1000 Value Index returned 2.8 percent, according to Morningstar.
But with vaccinations underway and the possibility of a return to something resembling normality rising, overlooked so-called value stocks have begun to show some signs of life. These are generally stocks that trade at lower price-to-earnings and price-to-book-value ratios than some investors think the companies are worth. And since Oct. 28, for example, t