Value investing works when downturns weed out the nonviable growth companies.
The Fed, ECB,BoJ, and many other CBs are making sure that downturn doesn’t come. Their actions aren’t pure successes, but in the financial markets, they are kings.
This results in value lagging growth, and will continue to do so until the CBs stop their adventurism, the negative consequences of their actions outweigh the good, or the tidal wave they’re holding at bay builds until it cannot be resisted. Make no mistake, it is building. WeWork was a classic example of froth. Softbank’s Vision Fund would be right at home in 1995. The rise in economic inequality induced by CB adventurism is probably what will get them in the end, for the relentless pumping of leverage works at economies of scale that make the rich richer. It doesn’t make the poor poorer except in comparison, but other things do that. People will begin to wonder why they’re paying taxes and interest to make the rich richer if they don’t get any benefits themselves.
However calling time is a fool’s errand and I won’t do it. The CBs are powerful, and they’ve defied every prediction of limitation so far.
Until they stop putting their oar in the markets, their oar breaks, or the wave sweeps them aside, they will ensure the failure of value vs growth.