Valuation Vs. Cheapness In Tactical Allocation
Several weeks ago, Applied Finance hosted a webcast where we reviewed aggregate market valuation characteristics across the US equity landscape. In this, we noted a structural intrinsic value preference towards growth stocks since 2002. While a mild value preference formed in April 2020, it has since normalized as value stocks have outperformed over the last two quarters. This observation is at odds with a recent publication from a traditional value manager (The Long Run Is Lying to You, AQR), which claims a historic book-to-price spread in favor of value stocks.
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