GMO examines the value versus growth debate, arguing recent growth leadership does not invalidate long term value investing. The paper challenges common narratives around rates, economic cycles, and outdated accounting, suggesting investors may be misreading short term signals. It frames today’s spread as one of the most attractive opportunities since the late 1990s.
Dispelling Myths In The Value Vs. Growth Debate
GMO
Ben Inker
Research
11 Pages
Key Takeaways
Extreme Spread Opportunity: U.S. large value outperformed growth by 94% and 114% in prior cycles, while current dispersion ranks among the widest seen since 2000.
Growth Reversal Context: After being up 1.6% in early Q2 2021, value lagged as growth surged 11% while value fell 0.7% into July.
Weak Rate Linkage: Changes in bond yields explained only 20% of value versus growth return variance over the last 36 months, weakening the rate driven narrative.
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