{"id":30215,"date":"2012-06-13T20:35:02","date_gmt":"2012-06-14T00:35:02","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/2012\/06\/large-cap-value-stocks-a-great-big-value\/"},"modified":"2012-06-13T20:35:02","modified_gmt":"2012-06-14T00:35:02","slug":"large-cap-value-stocks-a-great-big-value","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/06\/13\/large-cap-value-stocks-a-great-big-value\/","title":{"rendered":"Large Cap Value Stocks: A Great Big Value?"},"content":{"rendered":"

Article by Investment U<\/a> <\/p>\n

\"Large<\/p>\n

Even investors with little appetite for stocks should be looking at one dirt-cheap sector: large-cap value.<\/p>\n<\/div>\n

More than a few investors are feeling a little gun-shy right now.\u00a0Weak economic indicators \u2013 including soft employment and low consumer confidence \u2013 and ongoing problems in the Eurozone<\/a> have put many on the defensive.<\/p>\n

That\u2019s not necessarily a bad thing. When the market starts to wobble, there is often more downside ahead.<\/p>\n

But there\u2019s a big difference between investing defensively and not investing at all. Successful investing is about managing risk \u2013 not running from it.<\/p>\n

That\u2019s why even investors with little appetite for stocks should be looking at one dirt-cheap sector: large-cap value.<\/p>\n

Brandes Institute recently sliced U.S. stocks into 10 deciles by value characteristics and found that value hasn\u2019t just done better. From 1980 to 2010, the cheapest stocks outperformed the most expensive by 575%.<\/p>\n

Why does this happen? As a former money manager, I know that investing in value requires patience. That\u2019s something most retail investors \u2013 and many small institutions \u2013 simply don\u2019t have. They\u2019ll hold a stock or a stock fund a couple quarters and if nothing is happening \u2013 especially if growth stocks are doing well \u2013 they\u2019ll grouse that they\u2019re sitting on \u201cdead money\u201d and roll into something else, often at precisely the wrong time.<\/p>\n

The great global value investor John Templeton used to hold his stock positions an average of seven and a half years. Yet many investors would describe this approach as \u201cFrom Here to Eternity.\u201d<\/p>\n

That\u2019s why value investing is often referred to as \u201ctime arbitrage.\u201d It often takes several months (or years) for value investing to work its magic.<\/p>\n

Yet now is likely an excellent time to get started. Credit Suisse data reveals that the cheapest stocks in the S&P 500 index based on five metrics, including the price-to-earnings and price-to-sales ratios, have lagged the most expensive ones by 9% this year. And, according to Russell Investment, the last time a value index ranked on top and a growth index on bottom was the disastrous year of 2008.<\/p>\n

Every seasoned investor knows that various asset classes go through cycles of outperformance and underperformance. Value has lagged for a very long time \u2013 and now offers plenty of upside potential without the neck-snapping volatility of go-go growth stocks.<\/p>\n

How to play it? You can research and buy individual value stocks. Or you can take the simple, diversified approach and just buy a fund or ETF. If you prefer the latter route, a good candidate is the Vanguard Value ETF<\/strong> (NYSE: VTV).<\/p>\n

VTV tracks the performance of a large-cap, value benchmark: the MSCI US Prime Market Value Index<\/strong>. The fund remains fully invested and uses a passive management strategy (no active trading), so it is relatively tax efficient. The expense ratio here is the lowest in the industry \u2013 just 0.12%. And the fund\u2019s 10 largest holdings \u2013 which make up almost a third of the portfolio \u2013 are companies you know well: Exxon Mobil<\/strong> (NYSE: XOM), Chevron<\/strong> (NYSE: CVX), General Electric<\/strong> (NYSE: GE), AT&T<\/strong> (NYSE: T), Procter & Gamble<\/strong> (NYSE: PG), Johnson & Johnson<\/strong> (NYSE: JNJ), JP Morgan Chase<\/strong> (NYSE: JPM), Pfizer<\/strong> (NYSE: PFE), Wells Fargo<\/strong> (NYSE: WFC) and Intel<\/strong> (Nasdaq: INTC).<\/p>\n

In short, the recent sell-off has made value stocks a bargain right now. It\u2019s a great opportunity\u2026 if you have the patience for it.<\/p>\n

Good Investing,<\/p>\n

Alexander Green<\/p>\n

\n<\/a> <\/a> <\/a> <\/a> <\/a>\n<\/div>\n

<\/p>\n

Article by Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"

Article by Investment U Even investors with little appetite for stocks should be looking at one dirt-cheap sector: large-cap value. More than a few investors are feeling a little gun-shy right now.\u00a0Weak economic indicators \u2013 including soft employment and low consumer confidence \u2013 and ongoing problems in the Eurozone have put many on the defensive. … <\/p>\n

Continue reading “Large Cap Value Stocks: A Great Big Value?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-30215","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/30215","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=30215"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/30215\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=30215"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=30215"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=30215"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}