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Savita Subramanian: large cap value is the place to be for the next five years
This is a chart of Vanguard Growth Fund Price / Vanguard Value Fund Price (VUG/VTV). The moves are ginormous. Will Value reassert itself as Ms Subramanian's models/BAML models suggest? Clearly the charts would say there is a good chance.
This is a chart of Vanguard Growth Fund Price / Vanguard Value Fund Price (VUG/VTV). The moves are ginormous. Will Value reassert itself as Ms Subramanian's models/BAML models suggest? Clearly the charts would say there is a good chance.
I have no idea Asking for a friend: What am I'm looking at in that chart?
@WABAC and I saw one purple line on a graph. @catch22 then provided a graph with three lines, one of which was purple and apparently represented value, and allowed for a comparison.
@WABAC and I saw one purple line on a graph. @catch22 then provided a graph with three lines, one of which was purple and apparently represented value, and allowed for a comparison.
Thank you BenWP. It's nice to be seeing three dimensionaly.
But what is that chart supposed to prove? Is this some sort of "technical" analysis?
It represents one form of relative performance of USA growth vs value stocks. Growth has trounced value as we all know but in market sell offs value holds up better. Where are we now in that growth vs value cycle? Not at the bottom.
It represents one form of relative performance of USA growth vs value stocks. Growth has trounced value as we all know but in market sell offs value holds up better. Where are we now in that growth vs value cycle? Not at the bottom.
Now that I can see all three lines, it looks to me like one Vanguard index has trounced another Vanguard index over five years spanning rapidly changing market conditions.
If I had bought VSMIX or GQEPX five years ago I would be ahead of VUG. There may be other examples of funds that have performed better over the last five years. Those are just two that are on my watch list. I'll admit that only one of those is a value fund.
If we were to look at the last three years, during which growth has been digging itself out of a very large hole, a number of funds in my watch list outperform VUG. Only two outperform IWY.
I spent the last year ditching Vanguard index funds.
Edit to add:
Did a larger search at MFO Premium. Add HIMDX to the list of three funds that beat VUG over five years. The interesting thing about HIMDX is that it is a quant fund. Wouldn't we like to see the inside of their black box?
But what if we went back three years? There are 20 value, or equity income, funds that are beating VUG.
What if we went back to the start of "Normalization 2" which is 202112? Then we get a much larger number of value and equity income funds that are still beating VUG's return of 7.5 over that time period. (Lipper categorizes some funds as value that M* sees as blend.)
People assume that growth will continue to beat value just because. But, as with comedy, timing is everything.
up-trend = growth outperforming, 01/2023-now down-trend = growth underperforming, 11/2021-01/2023 flat-trend = both performing in-line; not seen for long as the two are opposites
@WABAC and BenWP I've added to two other performance charts for different time frames when Value could have provided some 'head fakes'.
--- Chart line colors likely vary by device type; but my laptop, for my very good eyes show red, a lime green and blue. Also, one may hover a pointer over the graph line at any point to 'see' the name of the fund/etf.
VUG vs VTV vs SPY (a reference choice) This chart is for 2 years and covers the full years of 2022 and 2023.
This chart is for the beginning of the COVID period and covers the full years of 2020 and 2021.
'Course, I'm showing these as time frames for various periods which can cause any of us who may want to make decisions in 'real time'. A tough road, for sure. Being, is this investment area really a solid 'trend' and/or rotation?
BIAS NOTE: We've been mostly U.S. centric investors for many years and fully since the melt of 2008. This includes equity and bonds. We obtain small pieces of international exposure via U.S. fund holdings. The 'other' bias is that we've been oriented to growth. 'Course there have a few scary periods for growth investors.
@catch22, thank you for the readable charts. VTV is still running ahead of VUG as of the last data drop at MFO premium to the end of June.
You ask "is this investment area really a solid 'trend' and/or rotation?" And I am reminded of a recent comment by Howard Marks highlighted in this thread (dinky linky.) "Investors should understand that the investment environment and the starting point for investments have a huge impact on their success."
People putting their money down at the end of 2021/beginning of 2022 might have different opinions about value versus growth than those of us playing around with various start times. The person that bought dumpy old FGRIX is probably tickled about his 12.5 return versus the 8.8 return of SPY, or the 7.5 return of VUG, his smarter friends bought. And there is no reason to assume that his smarter friends will ever catch up, though they will pound the table.
Of course FGRIX is only 35% value per M* although Lipper labels it LCV. There are plenty of other funds on the list that might better fit someone's definition of value. That old passive curiosity LEXCX returned 10.5.
Thanks for all the comments. With all said , my Pain in the Butt, are charts that show a small strip of color representing fund XXXXY & then adding another fund with a small strip of color, DAM close to the first !!! Then another fund or two added. I think charters do this to TICK me off ! Rant time over. Have a nice 4/th of July, Derf
Studies have indicated exploiting the momentum factor can generate alpha. Skilled traders who use momentum may be able to harvest some of this alpha. Numerous studies also indicate active trading often leads to poor performance. I contend the vast majority of individual investors should create a sensible investment plan and then strive to minimize trading activity.
Studies have indicated exploiting the momentum factor can generate alpha. Skilled traders who use momentum may be able to harvest some of this alpha. Numerous studies also indicate active trading often leads to poor performance. I contend the vast majority of individual investors should create a sensible investment plan and then strive to minimize trading activity.
I agree with the above and what I have been posting for many years. On the other hand, I also posted that most investors should use up to 5-7 funds and rarely trade. What I have seen on several sites for over 15 years is the worst of both. Too many funds and too many trades without any consistency, and many times trading at the worst time.
Remember, create a system, test and retest, make changes until it is worth it, and stick to it. Trading is like swimming; practice makes you better, but trading randomly doesn't make sense. Hint: valuation and low fund expense ratio should not lead your trading and why there are investors who have been holding Value and EM in the last 15 years.
Comments
This is a chart of Vanguard Growth Fund Price / Vanguard Value Fund Price (VUG/VTV). The moves are ginormous. Will Value reassert itself as Ms Subramanian's models/BAML models suggest? Clearly the charts would say there is a good chance.
I have no ideaAsking for a friend: What am I'm looking at in that chart?Value may remain value for good reasons and not yet ready for 'prime time'.
But what is that chart supposed to prove? Is this some sort of "technical" analysis?
If I had bought VSMIX or GQEPX five years ago I would be ahead of VUG. There may be other examples of funds that have performed better over the last five years. Those are just two that are on my watch list. I'll admit that only one of those is a value fund.
If we were to look at the last three years, during which growth has been digging itself out of a very large hole, a number of funds in my watch list outperform VUG. Only two outperform IWY.
I spent the last year ditching Vanguard index funds.
Edit to add:
Did a larger search at MFO Premium. Add HIMDX to the list of three funds that beat VUG over five years. The interesting thing about HIMDX is that it is a quant fund. Wouldn't we like to see the inside of their black box?
But what if we went back three years? There are 20 value, or equity income, funds that are beating VUG.
What if we went back to the start of "Normalization 2" which is 202112? Then we get a much larger number of value and equity income funds that are still beating VUG's return of 7.5 over that time period. (Lipper categorizes some funds as value that M* sees as blend.)
People assume that growth will continue to beat value just because. But, as with comedy, timing is everything.
up-trend = growth outperforming, 01/2023-now
down-trend = growth underperforming, 11/2021-01/2023
flat-trend = both performing in-line; not seen for long as the two are opposites
See longer 5 yrs at StockCharts (can use even earlier dates),
https://stockcharts.com/h-sc/ui?s=VUG:VTV&p=D&yr=5&mn=0&dy=0&id=p35418833536
--- Chart line colors likely vary by device type; but my laptop, for my very good eyes show red, a lime green and blue. Also, one may hover a pointer over the graph line at any point to 'see' the name of the fund/etf.
VUG vs VTV vs SPY (a reference choice) This chart is for 2 years and covers the full years of 2022 and 2023.
This chart is for the beginning of the COVID period and covers the full years of 2020 and 2021.
'Course, I'm showing these as time frames for various periods which can cause any of us who may want to make decisions in 'real time'. A tough road, for sure. Being, is this investment area really a solid 'trend' and/or rotation?
BIAS NOTE: We've been mostly U.S. centric investors for many years and fully since the melt of 2008. This includes equity and bonds. We obtain small pieces of international exposure via U.S. fund holdings. The 'other' bias is that we've been oriented to growth. 'Course there have a few scary periods for growth investors.
You ask "is this investment area really a solid 'trend' and/or rotation?" And I am reminded of a recent comment by Howard Marks highlighted in this thread (dinky linky.) "Investors should understand that the investment environment and the starting point for investments have a huge impact on their success."
People putting their money down at the end of 2021/beginning of 2022 might have different opinions about value versus growth than those of us playing around with various start times. The person that bought dumpy old FGRIX is probably tickled about his 12.5 return versus the 8.8 return of SPY, or the 7.5 return of VUG, his smarter friends bought. And there is no reason to assume that his smarter friends will ever catch up, though they will pound the table.
Of course FGRIX is only 35% value per M* although Lipper labels it LCV. There are plenty of other funds on the list that might better fit someone's definition of value. That old passive curiosity LEXCX returned 10.5.
Have a nice 4/th of July, Derf
See (link).
Skilled traders who use momentum may be able to harvest some of this alpha.
Numerous studies also indicate active trading often leads to poor performance.
I contend the vast majority of individual investors should create a sensible investment
plan and then strive to minimize trading activity.
On the other hand, I also posted that most investors should use up to 5-7 funds and rarely trade.
What I have seen on several sites for over 15 years is the worst of both. Too many funds and too many trades without any consistency, and many times trading at the worst time.
Remember, create a system, test and retest, make changes until it is worth it, and stick to it. Trading is like swimming; practice makes you better, but trading randomly doesn't make sense.
Hint: valuation and low fund expense ratio should not lead your trading and why there are investors who have been holding Value and EM in the last 15 years.