If you read last week’s Q2 2018 Market Update, you probably noticed that large company value stocks have been somewhat out of favor lately. This continued a trend that was noted in the Looking Back – 2017 Market Review. In fact, even though academic research has shown that stocks priced lower relative to their book value have had a 3.5% annualized premium over the broad market since 1928, in seven of the last ten calendar years, the value premium in the US has been negative.
This has prompted some ATX Portfolio Advisors’ clients to ask if we should reconsider our approach of overweighting portfolios to value stocks (think Exxon Mobil or Wells Fargo) versus higher cost growth companies (Amazon or Netflix)? Some have even asked if value investing is a relic of the past in these modern times?