Twelve tales of value – Counting down our 12 most-read stories of 2016
2016 has been a year that has confounded experts, pundits and forecasters on a number of occasions. And each time it has happened, here on The Value Perspective, we have not been shy about seizing the opportunity to suggest investors could spend their time more profitably looking back and studying the lessons of history than looking forward and striving to predict the future.
So what can we learn from this review of our 12 most-read stories this year? Well, aside from an absence of the various pieces on the folly of forecasting, the list reveals a gratifying mix of authors and subject matter – albeit with an apparent bias to another of the year’s big themes, the hunt for income. Here on The Value Perspective, we trust these and the rest of the year’s crop offered a different take on the world of investing.
12. Higher, stronger, bluster II – Nine things businesses do to improve the look of their accounts
In Higher, stronger, bluster I, here on The Value Perspective, we found ourselves inspired by the Rio Olympics. True to our contrarian nature, however, we skirted past the excellence and excitement on show over the last few weeks to touch on the less uplifting issue of performance-enhancing drugs. From there it was, for us, not a very long jump to the subject of corporate accounting practices. Read more here
11. Gut feelings matter far less in investing than a set of hard-and-fast rules
Much as the tabloids love a good health-scare story to run on their front pages, the Financial Times rarely seems able to resist a new piece of research on behavioural – or, in this instance, physiological – finance. And so it was that the story Man v machine: ‘Gut feelings’ key to financial trading success duly featured in a prominent position in the paper. Read more here
10. Think big - Why income-seekers must now take a view on commodities and financial stocks
You know how people often talk about somewhere being a market for so-called ‘stockpickers’ – that is, investors who have built a reputation for identifying winning businesses while most other companies are treading water? Well, here on The Value Perspective, we are becoming increasingly convinced the UK has become a market for dividend-pickers. Read more here
9. In the picture – There is no long-term relationship between GDP growth and future returns
As we have discussed before in articles such as Gross misconduct, few things seem able to excite investors and other market-watchers like a new set of GDP figures and yet, if GDP growth had any long-term bearing at all on future returns, you would be able to discern some sort of pattern in the chart below. As you can plainly see, however, the data is all over the place. Read more here
8. Why yield cannot be the sole driver of an investment decision
With yield seemingly the sole focus for many investors nowadays, what we are about to tell you may be hard to believe. Yet there really was a time – and not all that long ago – when a high dividend yield could be taken as a solid indication a business was generally underappreciated by the market. As the following chart clearly illustrates, however, that is currently very much not the case. Read more here
7. Full tilt – Income investors’ current huge bias to growth is a great opportunity for value
Value and growth, as we saw in Spur of the momentum, are often viewed as two sides of the same coin. If your portfolio is 50% in value-oriented investments, therefore, it is fair to suggest the other 50% is in growth – or, as they tend to have it in the US, ‘momentum’ – stocks. If you are 30% in value, then the chances are you are 70% in growth. Read more here
6. The fast and the furious – Why income-seekers should slow down and think carefully about yield
Every time I make the drive between London and Manchester to see my family, I will inevitably start thinking about speeds and speed limits – and from there, as a dedicated member of The Value Perspective team, it is only a short jump to the hunt for yield. No, bear with me – we will make the link in a fraction of the time it takes me to get beyond the M25. Read more here
5. The catch with 10-year fund performance tables
In the year we celebrate a decade at the helm of our flagship fund, here on The Value Perspective, it is perhaps understandable that we have been hearing a lot of the phrase ‘survivorship bias’ – the idea the past returns of existing mutual funds are flattered by the fact poorly-performing funds will often be closed or merged away by their management groups. Understandable, yes – but is it fair? Read more here
4. Fighting chance – The big difference between active and passive funds hardly anyone mentions
Regular visitors to The Value Perspective will know it does not take much to have us restating our misgivings about the way some investors are inclined to use market indices – and a new report from PwC suggesting the amount of assets held globally in exchange-traded funds (ETFs) will exceed $7 trillion (£5.4 trillion) within the next five years is way more encouragement than we need. Read more here
3. Medium and message - The more interest there is in a stock, the more likely it will be overvalued
Do you know what the Google search engine was originally called? Until recently, this particular nugget of trivia had rather passed us by, here on The Value Perspective, but Larry Page and Sergey Brin initially named their creation BackRub. Clearly the world would have been a quirkier place if, whenever you wanted to find out more about anyone, you had to give them a quick BackRub. Read more here
2. Income outcome - Why income matters much more than yield
Could a growing obsession with yield in some parts of the funds industry be distracting equity income investors from more important considerations? That is not to suggest yield is unimportant – only that it matters in much the same way knowing where you are at the start of a journey matters. Once you are on your way, however, knowing your destination and how to reach it become rather more material. Read more here
1. The FTSE 100 companies that now offer ‘deep value’
In Looking closely, we explained why, even though the FTSE 100 has been flirting with levels not seen since April last year – and is not so very far from its November 2007 and January 2000 peaks either – that did not tell the whole story from a value perspective. We outlined why this analysis was leading us to look closely at basic materials and banking stocks and promised shortly to address the same argument from a different angle. Read more here
The views and opinions displayed are those of Ian Kelly, Nick Kirrage, Andrew Lyddon, Kevin Murphy, Andrew Williams, Andrew Evans and Simon Adler, members of the Schroder Global Value Equity Team (the Value Perspective Team), and other independent commentators where stated. They do not necessarily represent views expressed or reflected in other Schroders' communications, strategies or funds. The Team has expressed its own views and opinions on this website and these may change.
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