A client asked me last week whether the recent rotation out of growth stocks (AI, software, and the like) would continue and whether it’s now too late to invest in value.
I know they were asking a relative question.
But I couldn’t help myself. I stepped back and answered first from an absolute standpoint.
Is now a good time to invest in value?
Absolutely.
Yes.
There is no bad time to invest in a company of good value.
Sure, that’s a bit of a play on words. But there’s an important lesson there.
Investing, truly investing, into something of absolute value tends to work out over time. There are fundamental truths underneath that statement.
Investing (and I use that word loosely) into something of relative value to something else is more akin to market timing. And thus, the loose use of the word “investing,” because it drifts closer to speculation.
I get it. I am repeatedly told by my partners here at Members’ Wealth that clients, prospects, and the marketing audience at large want to know my relative opinion on where to go right now.
And if you’re reading closely, I am admitting something:
My relative opinion, while desired, is far more speculative than fundamental.
But that’s the world we live in. A world of choices.
Invest here, earn 8%.
Invest there, earn 12%.
Always take the 12%. No brainer.
No way. Not in the least!...
Here’s what this particular (very astute, and yes, all of our clients are astute 😉) client was referencing:
Year-to-Date (through 2/13, approximated):
Whereas:
Other investments exist in the world outside of U.S. tech.
And sometimes they outperform U.S. tech.
Now is one of those periods.
Phew. Diversification still works.
All in good fun.
I’ll admit it. I’m value biased. I have been since the dot-com blowup in the early 2000s. I can’t help it. I like strong fundamentals, real cash flow, and conservative balance sheets underpinning my investment strategy.
That love of value doesn’t always win in relative terms.
But today, the sun is shining.
That said, when great companies like the Mag 7 go down in price and the world starts declaring their days are numbered, we lean in. We go deeper. We look for absolute value in a sea of red.
That’s the discipline.
Investors take note: February tends to be a weaker month for equities. Historically, that pattern appears to be holding, with the S&P 500 giving back January’s gains and now sitting roughly flat to slightly negative on the year.
So…
Bargain shopping for value, anyone?
If you’re questioning where to invest right now, we’d welcome the conversation contact us today.
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Dane Czaplicki is CEO of Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Dane and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs, and is determined to put service before all else.
Dane received his MBA from The Wharton School of Business at the University of Pennsylvania and his bachelor’s degree from Bloomsburg University. Outside work, he enjoys spending time with his wife and kids, hiking and camping, reading, running, and playing with his dog. To learn more about Dane, connect with him on LinkedIn.
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