Value vs Growth - A Trap?

Aug 04, 2020 | Jeremy Goldfarb


From the investment desk:


Value Trap - an investment that appears to be cheaply priced because it has been offered or traded at low valuation metrics for an extended period of time. 



If you look at the relative performance of the SP500 Growth and Value indices, you will see a fairly wide discrepancy in overall relative and absolute performance. Not only has this been exhibited in more recent trends, it extends back over longer time horizons (see 3/5/10 year time horizon on the left side of the image --- the right side is more recent week/MTD/YTD/12 mo). 


One could be convinced that in the short to medium term, there is a lot of value in ....well....value investments. But I offer a slightly different perspective, and that is "does the traditional value investment really look the same as it used to?". Even further, does it exhibit the same material characteristics as it did years ago (ie: can a technology company like APPL be a value stock?) 


The point of these posts is not to offer immediate answers, but rather to provoke thought and discussion. I believe that a total portfolio will have value, growth, income, and safety characteristics, and that trying to capture any one of these elements, at any one time is not dissimilar to timing the market. 


Another means of measuring true diversification......are missing any one of these elements?