Chart of the Week
Value investing historically outperforms growth over the long-term. The most often cited reason is that investors pay more expensive multiples for growth. The growth companies disappoint expectations leading to cheaper value companies outperforming. The decade of the 2010s was a particularly long period of growth outperformance, as large cap technology companies continued to exceed expectations. This outperformance cycles over time, with both styles trading places for the lead. Over the last 8 months, value has taken back the lead. Many cite the unwinding of the “meme-stock” craze of 2021 and rising interest rates as the catalysts. The winners in the prior cycle do not necessarily hold onto first place in the current one.
What We’re Reading
Lifestyles – Morgan Housel
Five Charts Explaining Why Inflation is at a 40-Year High – Washington Post
Eye on the Markets: Summer Reading List – JPMorgan
The Real-Life Maverick Who Took on 7 Soviet Jets in a Classified Korean War Dogfight – Task and Purpose
Podcast of the Week
The Maya Civilization – Stuff You Should Know
Tweet of the Week
The narrative around digital assets has changed over the years as the sector has gone through boom and bust cycles. This includes its use a payments system, a store of value, smart contracts, and others. Will crypto eventually lower transaction costs like credit card fees for consumers and businesses? Or is it a solution in search of a problem?
The Past Week
Inflation came in above expectations last week, yet bond prices increased to finish the week. Retail sales surprised on the upside, though on an inflation-adjusted basis sales fell for the second month in a row. Stock prices rallied to close the week on a strong note.
The Week Ahead
Solid earnings from Goldman Sachs and Bank of America started on Monday this week. A busy schedule of earnings reports is on deck for this week, with noteworthy reports from Netflix and Twitter. The housing survey came in lower, which indicates a key sector of the economy is slowing. Economists will be watching jobless claims and the Purchasing Manufacturing Index (PMI) data later in the week.
Talk to you next week.
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