MERISTEM INSIGHTS

VALUE TO BE HAD

Standard deviation is an investment term which simply refers to performance dispersion. The higher the number, the more that performance is out of whack versus historical comparisons. Value stocks have lagged their growth brethren for over a decade now and the chart below uses standard deviation to illustrate that the deficit has reached significant levels. In fact, only twice in the last 60 years have value stocks under-performed growth stocks by this much.

Cycles and reversion to the mean can be powerful forces in investing, as illustrated above. When value has previously reached these relative lows to growth, the rebound has been sharp and swift. We have not given up on value. In fact, we continue to rebalance prudently from growth to value-oriented managers with the fundamental belief that value will again cycle back to out-performance in the future.

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