August 2, 2018
Dear WEALTHTRACK Subscriber,
Are you a value or a growth investor? Do you favor cheap stocks or are you willing to pay up for above average growth in earnings or revenues? Do you look for companies that are overlooked, or out of favor, or in some cases even shunned because of real or perceived problems, or do you prefer to buy stocks on the rise, with upward momentum?
Those are some of the most basic differences between value and growth stocks. Historically, over the decades, value stocks have outperformed growth, although there have been times when growth became wildly popular, such as the Nifty Fifty era of the sixties and seventies when then fast growing large cap stocks like Coca Cola, General Electric, IBM and McDonalds dominated the new high lists. Then there was the nineties tech boom when fast moving dot.com revenues were all the rage.
Since the global financial crisis we have been in another extended period where growth has outperformed value. In recent months the gap between the price earnings multiples of value and growth stocks has been widening not narrowing. The behavior of small company stocks is a case in point. As of the end of 2017 the small cap Benchmark Russell 2000 Growth index had outperformed Russell 2000 Value in seven of the last nine calendar years.
That’s a huge change from the past. Over the last 40 years since the Russell 2000 index’s creation value’s 12,000% gain, or 13% annualized returns have swamped growth’s 4,000% rise or 10% annualized returns.
Why is value so undervalued these days?
In a WealthTrack exclusive, one of the top value managers in the business joins us this week. He is Charlie Dreifus, long time Lead Portfolio Manager of the Royce Special Equity Fund which he has managed since the fund’s inception 20 years ago. The fund is rated
4-star by Morningstar and carries a Silver Medalist analyst rating for its “…consistent execution and attractive risk/reward profile.”
Even with nearly 10% annualized returns Special Equity has lagged its benchmark during this bull market decade. It has however beaten the market since inception. In this week’s interview Dreifus explains why value has not been as highly valued as growth.
As usual, this week’s program is available to our PREMIUM subscribers immediately. Plus, in our online exclusive EXTRA feature, Dreifus talks about his belief in deep dive accounting, going through company finances with a fine tooth comb to identify financial weaknesses and strengths. It’s a skill and passion he learned from his mentor, award winning accounting professor Abraham “Abe” Briloff. Dreifus is determined to keep the Briloff legacy alive.
Thank you for watching. Have a great weekend, and make the week ahead a profitable and a productive one.
Best regards,
Consuelo
Video Clip:
M* Snapshot RYSEX
https://www.morningstar.com/funds/XNAS/RYSEX/quote.htmlLipper Snapshot RYSEX:
https://www.marketwatch.com/investing/fund/rysexRYSEX Ranks #52 In The (SCV) Fund Category By U. S. News & World Report:
https://money.usnews.com/funds/mutual-funds/small-value/royce-special-equity-fund/rysex 
