Pivot to Value?

Pivot to Value?
Heartland Advisors Value Investing 100 Base Value Chart

Source: The Leuthold Group and FactSet Research Systems Inc. 10/1/1990 to 10/31/2020 monthly. This chart shows relative strength between the Russell 1000 Growth and Russell 1000 Value Indices.
All indices are unmanaged. It is not possible to invest directly in an index. 
Past performance does not guarantee future results

The past few weeks have offered a vivid look at the risks caused by the decade-long outperformance of Growth over Value, as well as potential rewards for long-suffering value investors. 

For too long, the playbook has been the same--bid up large Tech names on the belief that earnings growth for the rest of the market would be lackluster. Historically low interest rates reinforced the view and made the promise of outsized earnings growth in the future appear more valuable in today’s dollars. The news that COVID-19 vaccines may be available in the coming months, has flipped that approach on its head. 

Pessimism has turned to economic optimism.

The new outlook has led to painful results for Growth investors who saw share prices drop. 

For Value investors who remained steadfast in their belief that the price paid remains the cornerstone of prudent investing, the reversal was a welcomed affirmation of a commonsense approach.

We don’t expect the Growth/Value dynamic to reverse in a straight line, but we do believe the last few weeks offers a valuable lesson to investors who may have been lulled into complacency.

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Bill Nasgovitz

Nasgovitz is Chairman and Portfolio Manager of the Value Fund and its corresponding separately managed account strategy. He has 53 years of industry experience, 38 at Heartland.


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Past performance does not guarantee future results.

Investing involves risk, including the potential loss of principal.

There is no guarantee that a particular investment strategy will be successful.

Growth and value investing each have unique risks and potential for rewards and may not be suitable for all investors. A growth investing strategy emphasizes capital appreciation and typically carries a higher risk of loss and potential reward than a value investing strategy; a value investing strategy emphasizes investments in companies believed to be undervalued.

Value investments are subject to the risk that their intrinsic value may not be recognized by the broad market.

The statements and opinions expressed in the articles or appearances are those of the presenter. Any discussion of investments and investment strategies represents the presenters' views as of the date created and are subject to change without notice. The opinions expressed are for general information only and are not intended to provide specific advice or recommendations for any individual. Any forecasts may not prove to be true.

Economic predictions are based on estimates and are subject to change.

Heartland’s investing glossary provides definitions for several terms used on this page.