growth versus value

Got To Do It? Get To Do It!

photo shows a bunch of balloons against a blue sky

Sometimes the business of life feels just like that: business. The business of staying healthy requires an occasional trip to the dentist or a plateful of greens when you’d rather eat something else.

But we’ve noticed a curious thing lately among some financial planner types. One related that a client said their meetings were like going to the dentist. Another compared the task of financial planning to eating your vegetables. Both talked about the planning process as something that is unpleasant, necessary, but good for your long-term welfare.

Our business with you does not feel like that.

Clients, we wouldn’t pretend to speak for you, but we often find both relief and joy in finding order in life’s chaos. It’s a pleasure to come to understand the meaning of your wealth. It seems we all get a little giddy when we check in and confirm you are on track for your long-term goals or can get your investments better aligned with your values.

What a treat!

As time goes by, the product of investment gains is sometimes wealth beyond expectations. (No guarantees, of course.) Reviewing a long history of beginning balances growing over time feels more puppy dogs and rainbows than dental appointments and bitter veggies.

Psychologists say attitudes are contagious. Some people have told me that I myself have a positive outlook. But that probably would not fully explain the difference in the tone and tenor of our meetings, compared to those dental appointment types. Maybe it comes down to these things:

  • We look for a good philosophical fit before we even begin a working relationship.
  • We believe that those not born with good investing instincts can learn.
  • We trust people to be the experts of their objectives and what they want to accomplish.
  • We strive to meet people where they are, to talk about our areas of expertise in only those ways that everyone participating has a grasp of what is going on—and what we are doing about it.
  • We keep our focus on the long term, to increase the chances that people get to their most cherished goals.

People working together, in mutual respect—that’s what we strive to be about. And what a joy it can be.

When you’re ready to collaborate on your plans and planning, email us or call.


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Extreme Discounts

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One of the basic distinctions made in the stock market is between growth and value. Growth stocks offer the potential or history of above-average growth in revenues and earnings. Investors are buying a brighter future.

Value stocks present a low cost in terms of price for a current dollar of earnings, or price/earnings (P/E) ratio. In the late 1990’s growth stock boom, value stocks were derided as “old economy” stocks. The exciting “new economy stocks,” computer chip and internet and fiber optic companies, were all firmly in the growth camp.

Investing in growth worked well until it didn’t. Value stocks went nowhere until the Tech Wreck, when growth stocks peaked and then fell a long way. The stock market often experiences periods where one of these factors outperforms, and the other one lags.

A recent article at MarketWatch.com1 detailed the work of a Wall Street analyst who claims that value stocks are at their biggest discount relative to growth in many years. The charts show that valuation differences generated by a decade of strong growth stock returns put value stocks at perhaps the biggest discount in history relative to growth.

In plain language, the bargain stocks have generally become bigger bargains.
When there are sound reasons for expecting better stock prices at some point in the future, we may own companies that are underwater, or down from what we paid for them, for an extended period.

We strive to own the best bargains. It is hard to watch as bargains become even better bargains while more expensive stocks do better. But we know how this works. We believe that sooner or later the bargains will produce gains.

If the differences in valuations are at extreme levels, perhaps the trend change is coming sooner rather than later.

Clients, if you would like to talk about this or anything else, please email us or call.

Notes & References

1. MarketWatch, “Value Stocks are Trading at the Steepest Discount in History”. https://www.marketwatch.com/story/value-stocks-are-trading-at-the-steepest-discount-in-history-2019-06-06. Accessed June 14th, 2019


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.