Bo Jackson was no value investor

Happy Friday!

I was trolling through my digital archive of sarcasm the other day, which is obviously extensive, and I came across something that made me smile:

This nugget became the inspiration for this week’s piece. I love quoting smart and famous people because it makes me appear as smart and famous as those I quote without doing any of the work that the smart and famous people had to do to come up with the quote. It’s what I like to refer to as “credibility leverage.”

So, this week I shared 10 quotes that I’ve used to shape my investment style and approach to speaking with clients. 

Moving on to more interesting news…

We are entering that time of the year when the market tends to get smacked around a bit. Eddy Elfenbein posted this on his blog this week:

“Yesterday was September 6 which is the traditional peak of the stock market. From September 6 until October 29, the Dow Jones Industrial Average has lost an average of 2.25%.

That may seem small but it’s very large for an average of 125 years. After October 29, the market perks up again and does well through the new year.”

Markets don’t run on calendars, but there is something about the end of summer that seems to cause headaches for investors. Since the S&P 500 has been so quiet this year, it probably won’t take much to spook investors.

Which is why I’m going to be writing about the debt ceiling next week because it looks like D.C. is planning another round of fireworks. Numerous articles on Wednesday about how the end of the world will come if we don’t raise the debt ceiling are starting to circulate.

Although it’s too early to call this one way or the other, this does feel a lot like how the debt ceiling debacle in 2013 got started. Let’s hope I’m wrong.

Lastly, I wrote a few weeks back on the growth vs. value debate. In it, I tried really hard to provide a balanced argument for both disciplines, but between you and me, it’s been an absolute slaughter.

Think about it this way… If the stock market was Tecmo Bowl, then Bo Jackson would be a growth investor and every other player on the field would be value investors. That’s how much growth has dominated value for the past 14 years.

As I’ve explained in the past, one of the reasons why value has underperformed has to do with the laughable absurdity at how value indexes defined “value.” Most only use one metric, which is price-to-book (P/B). Yes, billions of dollars are tracking indexes that use a single metric to define “value.”

Since a low P/B equates to a higher weighting in value indexes, sectors like financials and energy carry large weightings relative to core and growth indexes. This explains the few weeks earlier in the year when value outperformed growth. But since then, Bo Jackson’s been back on the field and tearing it up once again.

Well, this tweet from Ramp Capital was sent to me earlier in the week, and it’s top tier:

And to answer Ramp’s question… My talent would be a master sommelier because there isn’t a more pretentious skill out there than being able to nail a 1986 albarino by simply sticking your nose into the glass.

Enjoy the weekend…