If you’re not a client of mine, and know someone that’s loaded with tech stocks, help them take a look at the overlap in their portfolio. Have them look at their mutual funds and ETFs, and read the prospectus. Look at the top ten holdings. Chances are they’re all loaded with the same small group of GROWTH stocks. Remember, even trees don’t grow to the sky. There’s a shelf life, there’s a limit.
If you stick with a VALUE approach (you are if you’re with me) then you’re building in discipline, like a New Year’s resolution, by sticking to a plan. Combine this approach with the Prudent Man rule, and you have a nice one-two punch. It wasn’t that long ago when NASDAQ declined by 82%, and a lot of these GROWTH guys never saw it coming. And they weren’t there to clean up the mess either.
Over time, value has always beaten growth. But it takes patience and time to let this past truth become reality. There are no guarantees about the future. When one pays less for the same dollar of earnings (or Value), though, what approach do you think puts more money in your pocket?
Action Line: Finding the right value stocks and then finding the right temperament to see them through thick and thin is one of the most difficult things for investors to do. It’s hard to watch Tesla stock turn into your neighbor’s Model S based on government tax credits and irrational exuberance.
