Chart of the Week - Where's the Value?
“the past does not equal the future“
Before you check out this week’s chart, take a second and have a quick look at chart no.8 from the 12 Charts to Watch in 2024. What you will see is the combined relative price performance line of Global Small Value stocks vs US Large Growth stocks.
In case you didn’t click and see, the picture is one of a 17-year long relative bear market. US Large Growth has outperformed Global Small Value more than 5x over that period. Global Small Value sure must suck right?
Well, one consolation is a relative value trinity has emerged…
Small vs Large, Value vs Growth, Global vs US are all now trading at steep relative value discounts.
Investment product advertisements are always littered with “the past does not equal the future“ disclaimers, but in our context here those words actually mean something…
If you look back at the start of that 17-year relative bear market, across all 3 of those pairs, it was a starting point of relative overvaluation.
Let me state is simpler: in 2007 US large growth traded at a record discount vs global/small/value. Indeed it was those starting conditions that sowed the seeds for the stunning run in US Large Growth stocks.
Now that a new extreme in relative value has emerged, the seeds are once again sown, but for something quite different. The past will not be the future.
Key point: Global/Small/Value are extreme cheap vs US/Large/Growth.
See also: Archive of previous Chart Of The Week reports
Topics covered in our latest Weekly Insights Report
Aside from the chart above, we looked at several other charts, and dug into some intriguing global macro & asset allocation issues on our radar:
Emerging Markets: what’s changed, what still needs to happen
Global Policy Pulse: a very messy global pivot indeed
US Dollar Outlook: ranging for longer
GSV vs ULG: Global Small Value vs US Large Growth composite views
Defensive Equities: a unique and undervalued hedge/diversifier
Renewable Energy & Carbon: the bursting of the ESG bubble
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Callum Thomas
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