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Strategies & Market Trends : Value Investing
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To: James Clarke who wrote (1735)8/21/1997 6:51:00 PM
From: Premier   of 78774
 
James,

<Corrections turn into crashes because value investors have bought into the growth thing and are not there to provide support. >

Allow me to inject another argument. Brinson's 1989 article in Financial Analysts Journal stated that majority of returns are due to asset class selection. Some people feel that style rotation will beat the indeces. In a flat yield curve and low inflation environment growth stocks should perform better and steepening yield curve should favor value style. The result is greater volatility. In general, though, value stocks should do better than growth stocks. Sinquefield and others believe that value stocks are riskier and therefore offer this premium. But you have to beat indices quarterly whereas individuals do not have that constraint.

I would like to make a case for style rotation, at least partially. Lazy managers may stick to their style - value or growth.

Premier
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