12/15/17

Hello Monkeys,

With faster economic growth, higher inflation, the improved prospect for tax reform and most importantly, higher interest rates, I would expect value stocks to outperform growth stocks going forward.

However, a recent article from Bloomberg suggests that value stocks are becoming too "crowded" instead, while also considering the flattening yield curves and how reflation will only happen slowly.

Quote:

Companies with the cheapest valuations and whose shares tend to like steeper yield curves, a group that includes banks and miners, are unlikely to fare much better in the next year relative to stable profit generators, according to Sanford C. Bernstein quantitative strategists. Though global economic growth is still sound, reflation will only happen slowly, they said in a note, cutting "crowded" value stocks to neutral.

Quote:

While that same strategy turned popular at the end of last year, the MSCI World Value Index, which tracks some of the world's cheapest shares, has trailed the broader market every quarter in 2017.

Monkeys, what are your thoughts? Is it time to turn up the love again for value stocks? Or do you think that the sentiment towards value has become too stretched? Does this imply increased risk?

And what value stocks are you bullish on?

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12/15/17

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