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I’m not sure Yogi Berra is big source of investment knowledge for most investors. But, that doesn’t mean his words of wisdom, “déjà vu all over again,” don’t apply.

Today’s Wall Street Journal included an article titled, “Value Investors Face Existential Crisis After Long Market Rally.” It discussed the “rut” that value investing has experienced since 2009.  No arguments there. Value stocks are down about 1% year-to-date while growth stocks are up nearly 8%.  The tech-heavy NASDAQ Composite Index, which holds many of the favorite tech names among growth investors, is at its all-time high.

A Familiar Scenario

But as I sipped my morning coffee and read further, I didn’t ask myself how we should change our current value approach (for the portion of our portfolios dedicated to value investing) to match the current environment.  Instead, I found myself thinking about earlier in my career, the late 1990s.  Tech ruled the day from 1995 through 1999, and value investors lagged back then too.

warren blogBerkshire Hathaway’s Warren Buffett released his annual letter to shareholders last Saturday, a publication that is examined and dissected by investors around the world. And this year’s edition underscores why.

Before its release, the S&P 500 closed at its all-time high (again), continuing its rally that began in November. In fact, in the first 38 trading days of 2016, the S&P 500 has posted a new high 11 times. The Dow Jones Industrial Average and Russell 2000 Index have printed new highs 14 and 3 times in 2016, respectively.

Even the greenest of investors is likely aware that stocks move in both directions, and that periods of upswings have historically been followed by downturns. The Holy Grail, of course, is how to invest through all the ups and downs, and Buffett offers his view:

Janiczek blog 09.18In this age of big data full of endless streams of news flow, it’s understandable that we see investors with misguided benchmarks.  Let me explain.

The explosion of technology in the last 20 years has brought all sorts of firepower to our desktops such that many individuals feel empowered and encouraged do it themselves, become the next Warren Buffett.

Then there’s the media coverage that glorifies traders for making “a great call” on Company XYZ’s latest earnings release or interviewing Portfolio Manager John Doe and his top performing mutual fund the last x years.

As a former deep value analyst who studied legendary investor Warren Buffett (including traveling to Omaha for the annual shareholder meetings, a.k.a., “Woodstock for capitalists”), I always enjoy the Berkshire Hathaway annual shareholder letter.  This year marks Buffett’s 50th letter, making the reading all the more special.

There’s always something investors can learn from Buffett’s writings, but I approach the letters from a different angle.  The keen insights Buffett shares when describing how he runs Berkshire Hathaway can be applied to any business … and any family wealth.  

persistent-worries-gains“Given the big run that stocks have had, it’s probably a good time to sell.”

I recently heard this at a holiday party, but what struck me was how often I’ve heard the same thinking over the last 5 years … only with a different catalyst.

There seems to be plenty to worry about these days.  Richard Bernstein Advisors recently published the latest list of fears.


*Ranked/Named among Top, Best and Most Exclusive Advisors sources: Barron's March 2016, 2015, 2014; Advisory HQ March 2016; Financial Times June 2015; Five Star Professional November 2015, 2013, 2012,2011, 2010, 2009; Mutual Funds Magazine January 2001; NABCAP September 2010, 2011, 2013; Worth Magazine July 2002, January 2004, October 2004, October 2008; Wealth & Finance International, October 2014. Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Janiczek Wealth Management is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of Janiczek Wealth Management by any of its clients. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser.

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