Nery Alaev writes about value investing’s progress in 2016.
So far, 2016 has been the year (for commentators at least) in which the practice of value investing is destined to make a comeback and return to the centre stage of the investing world.
I’ve written about this previously and have decided to check up on the thoughts on value investing – how is the situation now?
A recent Financial Times article has a very positive outlook for the practice – pointing out that areas of the market commonly associated with value stocks such as commodities (mining, energy, materials) are currently very cheap and attractive as a result.
The drop is a result of several different factors, including China’s slowdown and oil’s fall in value (I’ve recorded a video presentation about this, available on YouTube).
As a result, value stocks are now being re-populated by commodities which has been a benefit for investors, who have been frustrated by a stagnant environment over the last decade or so.
Commenting on this in the Financial Times, Jack Ablin of BMO Private Bank says:
“We gave up on value after thinking it was looking good in the past. We have been waiting for momentum to change and we’ve seen some positive signs, so we are watching value closely now.”
This statement gives weight to the position that value stocks may be re-gaining their strength.
Writing in Investors Chronicle, Daniel Liberto points out that the fluctuations that took place last year may arise again in 2016 during the Summer and Autumn and that they have managed to push investors towards growth stocks in the past – this may negatively affect value investing’s future in 2016.
In summary, the picture is mixed as a result of the uncertain macroeconomic environment – the later months of the year will provide a better picture.
Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria.