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You Too Can Become A Value Investor: Asset Allocation Daily ​

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By SA For FAs :

Value Investing

Over long stretches, such as the past 23 years, value has outperformed the broad market by 209 basis points, yet in the first half of this year, value has underperformed the broad market by a whopping 231 points. At what point should investors get back into value? ( Ploutos )

Lithium

​A steady roll-out of wireless products, such as power tools, vacuums, phones, and computers over the past decade has driven increased demand for the metals that go into lithium batteries.​ Electric vehicles, in particular, are arousing investor interest in those resources. ( Franklin Templeton Investors ).

Autos

Short the autos and go long jobless claims. The auto sector is at huge risk from this escalated point on. The squeeze will be brutal. Higher tariffs on export sales will squeeze the top line while spiking steel and aluminum prices smoke bottom lines. ( Danielle DiMartino Booth )

Mexico

​Who is the real AMLO - the populist who took a confrontational stance at the start of the election campaign or the more moderate and pragmatic mayor of Mexico City in the early 2000s? Four signposts will help gauge the new president's governing style. ( BlackRock )

ETFs

​Ron DeLegge's podcast considers whether General Electric is still a blue-chip stock, offers ETF trade ideas for both bulls and bears, and provides a global recap on ETFs linked to key sectors like technology, consumer discretionary and commodities. ( Index Investing Show )

Thought for the Day

I like value investing. It just seems obvious to me that, according to both investment theory and market history, buying unloved stocks with low valuations will generate superior long-term returns. The difficulty of course is that it is not a correct science. Not every so-called value stock will cooperate with you, and therefore, the process is riddled with pain and frustration. For that reason, would-be value investors would do well to gird themselves and follow a disciplined process - or use a fund such as the top-linked article by Ploutos recommends.

But even that may be insufficient. These best-performing investments over long stretches can underperform for years at a time - they've got their own private bear markets that seem to last longer than the ones the average investor experiences. That's why value investors are a relatively small cohort; few are those with nerves of steel. But there's a way to make value investing more palatable, and that is to diversify heavily across sectors and countries, which of course moves you in the direction of the average investor. Keep your value tilt, but keep your sanity. Throw in some savvy tax management and you get to keep your capital gains as well. With forethought or the right professional advice, you too can become a value investor.

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See also Performance Of Factor Tilts: June 2018 on seekingalpha.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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