Jan 2016
Importantly, Yogi Berra had it right when he said, “It’s tough to make predictions, especially about the future.” Indeed, historically speaking, investors have shown a pattern of overestimating the future growth of faster-growing companies and underestimating the future growth of value companies. Such overestimating and underestimating logically should lead to the typical growth stock being overly expensive and the typical value stock being overly cheap, which should eventually result in the outperformance of value stocks (assuming you believe, as we do, that the markets ultimately reward actual growth). Indeed, this is what has occurred over the long term.