Value

Now there’s a thing. Such has been the relentless one-way trade of the buy-big-tech era, even thick skinned value investors have started to expand their remit. According to a Bloomberg article last week, only about one in ten funds remain true to their woollen socks, sporting a portfolio that is proper blue-chip value. As for the rest: “The only way to get rid of temptation is to yield to it”. Hmm. What a surprise then, to read that the mob of stocks that makes up the S&P 500 ‘value’ index has been quietly outperforming the shiny S&P 500 growth bucket; and outperforming for nigh on three years. Who knew? Stan ‘Fat Pitch’ Druckenmiller often whispers at drinks parties that the best economist he knows is the guts of the stock market. Before popping an olive in his mouth and wandering off to find the bar. Perhaps, then, something’s up. With all the focus on whether the ties at the Federal Reserve will cut by a little or a lot, or what the next NFP print will be, and how much previous prints will be revised lower, perhaps something is up and change is afoot. Perhaps a bigger shift is in play, and whether there’s a recession or soft landing it doesn’t make much difference. The sands of geopolitics are shifting. Regional wars keep newsreaders in shrill tones. Capital gushes into mega-projects like data centres and electricity grids, just as many key commodities lurch into long-term supply deficits. More widely supply chains are being rejigged, the West is ageing and there’s too much debt. Whistle through the teeth stuff. Uncertainty abounds. And yet, perhaps, the winners of the coming decade are just starting to emerge. And they might just be wearing woollen socks.