As our regular readers know, value stocks have underperformed the broader market for the past few years, while growth and momentum stocks have outperformed. In fact, this divergence has been so pronounced that it erased some very long-term records of outperformance among several well-respected value managers.
2016 is off to a historically poor start, with the S&P 500 down 9% from its May 21 record of 2130.82 as we write this commentary. Although corrections of 10% are fairly common, below the surface, the picture looks even worse.
Amidst the backdrop of extreme partisanship in this year’s presidential primary–and prevailing negative talking points on the state of the union–Berkshire Hathaway’s 2015 letter to shareholders offered a more optimistic take on America’s future. Berkshire’s 85 year old CEO, Warren Buffett, reflected on the growth in living standards during his lifetime:
“If you don’t know who you are, the stock market is a very expensive place to find out” Adam Smith, Author of “The Money Game”
As the year comes to an end, we wanted to thank you for your trust in our services. We’ve worked with some of you and your families for more than 20 years now, and it is much appreciated.
In our Q2 review, we pointed out the exceptional long term performance of health care stocks, and in particular, the improbably strong performance of pharmaceutical and biotech shares (noting that about 70% of the companies in the Nasdaq Biotechnology Index had not even reported a profit over the prior twelve months).