After years of underperformance, value stocks finally outshone their expensive growth counterparts in 2022. In fact, value stocks have just enjoyed their strongest 12-month period relative to growth in 21 years, according to Ben Inker of GMO, the fund giant founded by renowned investor Jeremy Grantham.Value stocks didn’t actually make money in 2022 – it’s more that growth stocks suffered an annus horribilis.
Importantly, the most expensive US growth stocks still look pricey relative to the rest of the market. They peaked out trading around four times the valuation of the average company, says Inker, and are now trading around three times – “still one of the more extreme valuations of the last 40 years”.