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Is "value" going to be dead for a while? ...stop falling in love with funds ..."Large Growth" might continue its extended run... Consider switching FMIJX with an international growth fund?
Hi @VintageFreak. No one can answer these questions, so you may be looking more for affirmation on your own opinions above. I think you know what you want to do.
I will say, my opinion, is that switching funds dollar for dollar on the same day will probably be safer in the long run than trying to pull out and time the next buy. So, make the switch.
I know you have this motto 'when you buy is more important than what you buy'. But the flip side of that is 'when you sell is more important than what you sell'. Intn' growth is hot (or at least better by relative comparison) - buy it now(?) Intn' value has lagged - sell it now(?) How does that follow your motto?
I own FMIJX and I don't plan to switch. Am I in love with the fund? Maybe. FMI has been a very good fund company and I still expect it to be that in the future. Management has been stable and they certainly have a great long term track record - what's not to love ... But, we all have different investment styles. I couldn't argue with anyone who would switch fund for fund if they lost confidence.
Regarding value versus growth, the question boils down to what is the academic historical evidence for why investment strategies do well and the particular conditions in which they have historically done well? Then, one must ask whether any of those particular conditions are present today and what important differences are there today with those historical conditions? I don’t have the data in front of me but the value/growth performance record has been tied to a number of factors such as interest rates, inflation, the valuation spread between value and growth indexes, whether we’re in the beginning of an economic cycle or end, more recently the pace and depth of technological disruption and the willingness of governments to turn a blind eye towards monopolistic corrupt behavior. Right now I would advocate for personally high quality value—low debt but cheap—or growth at a reasonable price—good growth but not crazy dotcom level valuations. FMI fits well into the high quality value camp, despite its recent slump.
I think certain subsectors of 'growth' are going to be fine for the forseeable future ... cloud and operational technology, plus perhaps some pharma. But I'm not a broad -v-V investor, as I look at individual companies and sectors versus investing along those dueling broad themes.
Okay, back on topic. Is "value" going to be dead for a while? It seems to me "Large Growth" might continue its extended run even after we recover from the current crisis. We need to stop falling in love with funds. Consider switching FMIJX with an international growth fund?
@VintageFreak, it appears to be upsidedownworld whereby growth funds weathered the downturn better than value. Perhaps the reason for this is the fact that technology was used to make the adjustment to staying at home and developing a response. I do agree that we need to stop falling in love with funds, and I would add fund Managers. I have added BGAFX and MSFBX. BGAFX is certainly a growth fund, but the latter seems to be a growth fund by happenstance.
I do have love for Chuck Akre and I'm starting a bromance with Kristian Heugh.
@Brianw I don't think it's a given that value beats growth during a bear market historically. In fact, I think one of the reasons value historically beat growth over the long-term was that the economy was reasonably healthy over the long-term and weaker value companies tended to recover after declines moreso than stronger and more expensive growth ones. But in a slow growth low interest rate economy people will pay up for growth especially in one where anti-trust control/breakups of monopolies yields to plutocracy and oligarchy. You end up with a winner take all economy. And during really vicious bear markets in such a Gilded Age style environment, the weaker players don't recover. They go bankrupt. The nature of the previous two bear markets is illustrative of that. The 2000-2002 bear market was a valuation driven one where the economy suffered but not destructively so except for the most overvalued sectors--tech and telecom. Value did extremely well in that bear market. But in the 2008 and 2009 bear it was a systemic problem with capitalism itself and everything was crushed. Value did worse than growth as the weakest companies didn't survive. I think there is an implicit assumption in this bear that weaker companies will go bust due to covid. That assumption may in fact be wrong as the outcome is opaque in many ways. If the recovery is a V shaped one, value will crush growth again. If it isn't V shaped and we linger or worse backstep, growth will survive just like the bluest of blue chips survived the Great Depression. But if its a V, I think many of these overhyped tech stocks will underperform their far cheaper peers.
Comments
I will say, my opinion, is that switching funds dollar for dollar on the same day will probably be safer in the long run than trying to pull out and time the next buy. So, make the switch.
I know you have this motto 'when you buy is more important than what you buy'. But the flip side of that is 'when you sell is more important than what you sell'. Intn' growth is hot (or at least better by relative comparison) - buy it now(?) Intn' value has lagged - sell it now(?) How does that follow your motto?
I own FMIJX and I don't plan to switch. Am I in love with the fund? Maybe. FMI has been a very good fund company and I still expect it to be that in the future. Management has been stable and they certainly have a great long term track record - what's not to love
I think certain subsectors of 'growth' are going to be fine for the forseeable future ... cloud and operational technology, plus perhaps some pharma. But I'm not a broad -v-V investor, as I look at individual companies and sectors versus investing along those dueling broad themes.
I do have love for Chuck Akre and I'm starting a bromance with Kristian Heugh.