Underdogs

DOUG  By Guest Blogger Doug Rowat
.

Growth versus value. It’s a rivalry as old as time. It’s the investment industry’s equivalent of the Red Sox versus Yankees.

And like the Red Sox versus Yankees, the Bronx-Bombing growth stocks over the long term have generally trounced the underdog value-stock Beantowners:

S&P 500 Growth Index (blue line) vs S&P 500 Value Index (white line – long term

Source: S&P, total return performance

Growth stocks have, in fact, returned an incredible 16% annually over the past decade versus 11% for value stocks. The value-stock rate of return is still impressive, but somehow it’s always overshadowed by its pinstriped growth-stock rivals. However, every once in a while, value stocks shrug off the demons of Bill Buckner, throw a bleeding Curt Schilling onto the mound and pull off an impressive victory. We may be witnessing such a value-stock win as we speak.

First off, what are value stocks? Value stocks, as the name implies, are underpriced equities, and because they’re underpriced, they’re often out of favour. Following the 2008-09 financial crisis, for instance, a lot of “value” could be found in US banking stocks or US homebuilder stocks. Similarly, the Covid-19 crisis, has created pockets of deep value as well.

An excellent example of a Covid-19 value stock would be Walt Disney, which is heavily weighted in most value indices and value ETFs. Fairly or not, Disney was punished at the outset of Covid because many of its businesses were seen as susceptible to lockdowns: theme parks, cruise ships and film production studios, for example. With sports also shuttered, ESPN, a smaller Disney enterprise, was also viewed as a liability. The end result was a more than 40% drop in its share price from its pre-Covid peak to its March 2020 lows.

Two main factors, however, have driven a recent rally in value stocks: 1) the perceived unsustainability of growth’s outperformance and 2) the positive developments surrounding vaccines.

First, growth’s overextension. Growth stocks usually experience free-reigning momentum and are allowed by investors to become expensive because investors are willing to pay extra for the growth potential. However, growth stocks are being viewed now as excessively overpriced. The chart below, for example, shows the rolling 12-month price return between the S&P 500 Growth and S&P 500 Value indices. As the chart indicates, growth stocks recently hit a relative performance extreme. In fact, the highest in history, eclipsing the highs seen during the tech bubble of the late 1990s. Given the run in growth stocks, the compelling value, so to speak, that value stocks are offering hasn’t been lost on investors.

Growth’s relative performance extreme: the highest in history!

Source: CFRA

Secondly, vaccine news. Using Walt Disney again as an example, the emergence of effective treatments for Covid-19 from Moderna, Pfizer and AstraZeneca in just the past month has allowed investors to picture a more normalized world in 2021, one where consumers return to theme parks and cruise ships, for example. Whether this will play out as smoothly as investors hope is, of course, the risk, but for now, the vaccines offer the possibility of beaten-down value stocks returning to higher levels of profitability next year. As a result, value stocks have begun to more strongly outperform, with the outperformance coinciding almost exactly with the vaccine news:

S&P 500 Growth Index (blue line) vs S&P 500 Value Index (white line) – q-t-d

Source: S&P, total return performance

Whether the outperformance can continue remains to be seen, but as markets and economies emerge from a crisis is often when value stocks realize their best sustained outperformance. An overextended growth sector and vaccine developments are also likely to serve as additional catalysts for the value sector. Therefore, it’s worth having a portion of your portfolio in value stocks (within a well-diversified value ETF, of course).

As the market emerged from the financial crisis beginning in March 2009, value stocks outperformed growth stocks consistently over the next two years, and did particularly well during the first year of the market rally.

The same thing may happen as we emerge from the Covid crisis.

Growth is great, but not even the Yankees can win every year.

__________________________________________________________

Finally, I came across this nifty chart recently from Invesco. You might hate Biden and his economic policies or you might have hated Trump and his economic policies back in 2016, but this chart shows why it’s important to never let your personal antipathy towards a politician or a political party interfere with your investment decisions.

Democrat or Republican, never bet against America:

Growth of $10,000 in the Dow Jones Industrial Index since 1896

Source: Invesco
Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.

 

85 comments ↓

#1 Paul on 11.28.20 at 10:01 am

So pretty much all growth in the dji happened in the last 40 years ? Wow

#2 Prince Polo on 11.28.20 at 10:07 am

For us cheapskates who don’t have an advisor, and rely solely on the investing advice of the greaterfool comments section (I kid!), why worry & hand-wring about value vs growth? Own both, with a diversified S&P500 fund, and you get the Goldilocks scenario (never too hot nor too cold). I love my portfolio, lukewarm please.

#3 Debtslavecreator on 11.28.20 at 10:34 am

My bet is on yields bottoming now – February if not already
March onward value wins for next 2-3 years at least
Give away deals on the few quality energy companies worth owning
Preferreds should have a stellar 21
TSX top 3 in the world in 21
Tech blue chips severely underperform

#4 Jeff on 11.28.20 at 10:37 am

It’s snowball effect. The market doubling from 200 to 400 doesn’t look like much on a chart like this.

#5 crowdedelevatorfartz on 11.28.20 at 10:48 am

@#1 Paul
“So pretty much all growth in the dji happened in the last 40 years ? Wow”

+++++

Blame boomers.

#6 crowdedelevatorfartz on 11.28.20 at 10:59 am

@#112 KLNR
“I’d go with 2000 ducati 996/748 as best looking sport bike ever. followed closely by the BMW s1000rr”

++++

Im thinkin this Vancouver electric motorcycle company may be on to something……..

https://www.youtube.com/channel/UCvzkLK8eB9g6b_Yn818zdaQ

#7 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 11.28.20 at 11:21 am

Growth is great, but not even the Yankees can win every year.

====================================

But you can bet EVERYTHING on the Make Believes!

53 YEARS OF AWESOME TORONTHOLE INCOMPETENCE!

#8 truefacts on 11.28.20 at 11:30 am

Doug “…growth stocks over the long term have generally trounced the underdog value-stock Beantowners”

Doug, I really enjoy your articles, but I have to disagree with your above statement (unless you are only talking the 10-year time frame your chart shows).

Over the LONG term (since 1926), value has outperformed growth:

1,344,600% for value
626,600% for growth

https://www.forbes.com/advisor/investing/value-vs-growth-stocks-performance/#:~:text=Indeed%2C%20over%20the%20past%20100,investing%20has%20outperformed%20value%20investing.

Or take a look at the data in “The Future for Investors” by Jeremy Seigel. Of course, this could change in the future, but the past stats show value has won out over time…

#9 Etown on 11.28.20 at 11:34 am

Hi Ryan, where would you put cdn energy and pipeline companies, in your value basket or a lost cause

#10 KNOW IT ALL on 11.28.20 at 11:41 am

And what’s our definition of GROWTH stocks?

#11 Trudeau’s Magic Money Machine on 11.28.20 at 12:13 pm

I want out.

#12 Stan Brooks on 11.28.20 at 12:15 pm

Keeping lying about our true debt by only counting the federal debt.

Canada’s pandemic response has created the highest deficit-to-GDP ratio amid major industrialized countries for the year, according to an IMF report, but its net debt to GDP ratio remains the lowest in the G7.

https://ca.yahoo.com/finance/news/canada-reveal-huge-covid-19-180701850.html

The most dishonest reporting, equalized currently with openly lying about the true size of government debt
that is tadaaaaaa:

https://en.wikipedia.org/wiki/Canadian_public_debt

Canadian government debt, also called Canada’s “public debt,” is the liabilities of the government sector. For 2019 (the fiscal year ending 31 March 2020), total financial liabilities or gross debt was $2434 billion for the consolidated Canadian general government (federal, provincial, territorial, and local governments combined). This corresponds to
105.3% as a ratio of GDP (GDP was $2311 billion).

Complete lack of integrity in a bankrupt financially and morally society.

No, you are broke and can’t afford any more debt despite what the lairs tell you.

Cheers,

#13 crowdedelevatorfartz on 11.28.20 at 12:23 pm

…..And just when you thought it was safe to allow your ducks and geese outside to play……

https://www.reuters.com/article/us-health-birdflu-norway-idUSKBN28729O

#14 Doug Rowat on 11.28.20 at 12:31 pm

#8 truefacts on 11.28.20 at 11:30 am
Doug “…growth stocks over the long term have generally trounced the underdog value-stock Beantowners”

Doug, I really enjoy your articles, but I have to disagree with your above statement (unless you are only talking the 10-year time frame your chart shows)….

—-

Ten years is still long term. But allow some artistic license: the Yankees can’t be the boring value stocks.

The main point, of course, is to consider having value exposure now.

—Doug

#15 Dr V on 11.28.20 at 12:41 pm

Some good comments already. I believe owning the index is more efficient. Too much guesswork in identifying value. It might be cheap for a reason. The index captures all at a cheap ongoing cost. Will also yield some dividends, though I do have funds concentrating on that too. You can temper index volatility by hedging with a little lo-vol.

#16 S.Bby on 11.28.20 at 12:50 pm

That graph could also be labelled: “Monetary destruction since 1980 thanks to excessive money printing”

#17 JSS on 11.28.20 at 12:55 pm

Examples of beaten down US value stocks: Exxon Mobil, AT&T, Cisco, Walgreens.

Canadian ‘beater’ value stocks: Enbridge, Manulife, Riocan, Scotiabank.

#18 Johnny gun on 11.28.20 at 12:59 pm

Blows my mind that the economy is absolutely tanking and all the stock guys use the stock prices as a measuring stick. Has nothing to do with the fact that 22% of all the money creation in history happened this year! Melt-Up!

#19 Flop... on 11.28.20 at 1:19 pm

I heard a report on my 30 year old General Electric radio that Disney is laying off 4000 more workers.

This number is apparently an upgrade from the previously released number in late September up to 32,000 from 28,000 employees to be laid off in the first half of 2021.

https://www.independent.co.uk/news/world/americas/disney-lay-off-workers-coronavirus-pandemic-b1762170.html

————————————–

Also, Billybob, I watched the 2020 special last night on the Lion Air and Ethiopia Airlines crashes and the updates Boeing was forced to make.

Apart from the obvious anguish the families displayed while being interviewed, I thought they did a half decent job of detailing events right up to the other day when a 737 max flew for the first time from Miami to New York, if my memory serves me correctly.

They showed the flight simulator situation of the second crash showing the turning the Mcas system back on but respectfully stopped it when the plane was making its final dive towards the ground.

I thought it was a good explanation, for a commercial pilot like yourself you might find it too dumbed down.

That’s not always a bad thing if you want people to fully understand you.

I dumb down my own posts so even I can understand them…

M46BC

#20 Apocalypse2020 on 11.28.20 at 1:20 pm

Minutes ago on CNN:

“Upcoming case surge will be destabilizing for the U.S…….economy….and Homeland Security…”

(Dr. Peter Hotez)

“….one of the darkest chapters in modern American history”

The USA is now vulnerable to a rampant increase in health emergencies plus wide-ranging international attacks like never before. And it is getting worse daily.

Trump loves it.

And so does Iran, Russia, China, NK and more.

A perfect winter storm like never before.

Perfectly unsurvivable for most.

PREPARE

#21 Dr V on 11.28.20 at 1:22 pm

17 JSS – Scotia is definitely the buy in the big 5 banks right now being 15% cheaper P/E than the average of the others. Manulife cheap at 8.5 P/E with 5% dividend with a safe 40% payout. I may mention it to my advisor (again).

not sure about Enbridge. They are not really an energy
producer but more a provider. P/E is over 40, and divvies are overpaid. There may be deeper value if you dig into the financials.

https://www.marketbeat.com/stocks/tse/

#22 SOMETHINGS UP! on 11.28.20 at 1:30 pm

WOW….Look at that chart!

Looks like a BUBBLE about to burst.

Heading back to the 2000s level shortly.

#23 WillinSC on 11.28.20 at 1:34 pm

Any bets on the best preferred ETFs to hold in the next while?

#24 Apocalypse2020 on 11.28.20 at 1:35 pm

NK hackers attacking vaccine makers –

https://www.reuters.com/article/us-healthcare-coronavirus-astrazeneca-no/exclusive-suspected-north-korean-hackers-targeted-covid-vaccine-maker-astrazeneca-sources-idUSKBN2871A2

Terrible incursions, but perfect timing for US enemies. As tens of millions prepare to get vaccines, foreign threats may discourage them, causing more deaths, or tamper with the doses – causing still more deaths.

Living in secure rural isolation means you have less need to even consider this threat.

PREPARE

#25 SoggyShorts on 11.28.20 at 1:47 pm

Great article Doug, thanks.
How does the S&P 500 split between Value and Growth?
My google-fu wasn’t able to find the answer.

#26 Odif on 11.28.20 at 1:53 pm

Doug, you forgot to mention a new category created by Millennials: Meme stocks!

If you think the P/E ratio of growth stocks is crazy, wait until you look at meme stocks. There is TSLA, PLTR, NIO…

You get the chance to regularly see someone on WSB going from 100k to 5-10M in a 1 year timeframe playing options.

#27 mike from mtl on 11.28.20 at 1:59 pm

#18 Johnny gun on 11.28.20 at 12:59 pm
Blows my mind that the economy is absolutely tanking and all the stock guys use the stock prices as a measuring stick.
//////////////////////////////////////////////////////////

Obviously does, but apart from RE what other alternatives are there to the relentless destruction of purchasing power and inflation which officially does not exist?

#28 the Jaguar on 11.28.20 at 2:27 pm

Yankees versus Red Sox? Red Sox. Why? One name, one man – Luis Tiant. He turned 80 on Wednesday. Jim Palmer (Hall of Fame Pitcher) said ” You can talk about anybody else on that team ( 1975 Boston Red Sox) you want to, but when the chips are on the line, Luis Tiant is the greatest competitor I’ve ever seen”. Happy Birthday, Luis.

p.s. That isn’t Dharma Bum’s kid in the photo again, is it? Mercy.

#29 espressobob on 11.28.20 at 2:30 pm

Global all cap by market cap spreads the risk.

Specialty plays have merit for those who have portfolios that can cushion any downside. On the other hand, the measure of upside is only relevant depending on the purpose of the exercise.

No one size fits all. Just saying.

#30 Dogman01 on 11.28.20 at 2:54 pm

18 Johnny gun on 11.28.20 at 12:59 pm

“Blows my mind that the economy is absolutely tanking and all the stock guys use the stock prices as a measuring stick. Has nothing to do with the fact that 22% of all the money creation in history happened this year! Melt-Up!”

—————————————————-
If they create more money it eventually ends up in the hands of the few whom hold wealth, prices just go up up up for assets while wages stagnate. Join the asset team as the wage team are always losers…..I would hate to the young lacking an inheritance as they are being priced out of ever being on the permanent winning team ….the Wealthy!

Goodbye upward mobility Western World and hello Plutocracy!

Bring on Inflation!

#31 Simon on 11.28.20 at 2:58 pm

So does history matter or not? – everyday it changes here.

#32 Doug Rowat on 11.28.20 at 3:00 pm

#25 SoggyShorts on 11.28.20 at 1:47 pm
Great article Doug, thanks.
How does the S&P 500 split between Value and Growth?
My google-fu wasn’t able to find the answer.

—-

I suspect Google-fu failed because not even Google understands the math involved in how S&P sorts and classifies index constituents.

I believe, and no doubt someone here will correct me, there is actually overlap between the Growth and Value indices, which makes determining the exact split difficult.

But, generally speaking, growth stocks are fewer in number but have a market cap almost double that of value, which makes sense given growth’s longer term outperformance and that it can claim the 3 largest companies in the world: Apple, Microsoft and Amazon.

—Doug

#33 charts galore on 11.28.20 at 3:01 pm

an analog chart designed to illustrate a point. change it to logarithmic, and you get a different look. adjust for the collapse in purchasing power, and see another viewpoint. add total return, you get another picture. adjust by the price of gold, different again….

#34 SoggyShorts on 11.28.20 at 3:11 pm

#21 Dr V on 11.28.20 at 1:22 pm
17 JSS – Scotia is definitely the buy in the big 5 banks right now being 15% cheaper P/E than the average of the others. Manulife cheap at 8.5 P/E with 5% dividend with a safe 40% payout. I may mention it to my advisor (again).
https://www.marketbeat.com/stocks/tse/

********************
Wait, what? You pay a financial advisor but you’re the one advising him?

#35 SoggyShorts on 11.28.20 at 3:24 pm

#32 Doug Rowat on 11.28.20 at 3:00 pm
#25 SoggyShorts on 11.28.20 at 1:47 pm
Great article Doug, thanks.
How does the S&P 500 split between Value and Growth?
My google-fu wasn’t able to find the answer.

—-

I suspect Google-fu failed because not even Google understands the math involved in how S&P sorts and classifies index constituents.

I believe, and no doubt someone here will correct me, there is actually overlap between the Growth and Value indices, which makes determining the exact split difficult.

But, generally speaking, growth stocks are fewer in number but have a market cap almost double that of value, which makes sense given growth’s longer term outperformance and that it can claim the 3 largest companies in the world: Apple, Microsoft and Amazon.

—Doug
*********************
I think I found a way to check:

VOOG lists 282 Growth stocks
VOOV lists 390 Value stocks
VOO lists 508 stocks

So by cross-referencing those lists it should be possible to figure out what % of VOO (the S&P 500) is made up of each, right?
At least as far as S&P and Vanguard define the term?

#36 espressobob on 11.28.20 at 3:25 pm

#33 charts galore

Gold tends to appreciate with inflation but provides no profit over time. Pointless effort.

Owning the miners has way more upside than the underlying commodity.

Better yet, why not own a global ETF that’s diversified across the board? Time proven results.

#37 growth vs value on 11.28.20 at 3:25 pm

at this point its not going to be an issue of growth vs value going forward but US vs rest of the world. majour foreign stock indicies (in USD, you can see country funds like EWA, EWD, there’s a whole list) peaked in 2007/8 and some as far back as 1998, and are still below those levels.

with the DXY making lows daily, now closing at the lowest level since May 2018, heading for a wipeout if it doesn’t stop soon, i wouldn’t want to be holding US securities… the foreign markets would be the place to be.

#38 truefacts on 11.28.20 at 3:37 pm

“The main point, of course, is to consider having value exposure now.” – Doug

Fair point – agreed…

#39 Out Of Work CEO, Will Travel on 11.28.20 at 3:38 pm

Growth stocks as a group do not square the circle for income starved investors and/or the retired set. The need to digest the high flyers in a risk averse file is not addressed in managed accounts as it presents a serious change of financial planning. You can’t go into the local 7/11 and pay with criptocurrency. Worlds apart.

#40 espressobob on 11.28.20 at 3:51 pm

#37 growth vs value

VXC is knocking it out of the park. Along with a position in the TSX comp. Sweet.

Analysis usually leads to paralysis.

The law of relativity.

#41 Mark on 11.28.20 at 3:59 pm

Hi Doug,
Thanks for acticle, what’s your go to value funds.
How about vbr I believe it’s called in states the vanguard small cap value fund ETF?
How about for international any thoughts on a ETF?

Ty

M.

#42 charts galore on 11.28.20 at 4:03 pm

#36 espressobob on 11.28.20 at 3:25 pm

Gold tends to appreciate with inflation but provides no profit over time.
__________________________________________

completely untrue.
there has been little or no “inflation” (in fact, there have been cries of deflation) in the last 20 years and gold has been one of the best performing assets of any kind. (10% pa compounded for 20 years 2000 to present)

Owning the miners has way more upside than the underlying commodity.
______________________________________

again. completely untrue.
to get the upside you need to pick individual miners.
we can all do that in hindsight.

the XGD went from $7 (2001 low) to $28 (2011 peak)
with a massive 60% drawdown in 2008

meanwhile physical gold went from around $400 (2001) to $1900 (2011) with NO drawdown in 2008.

(in comparison to US$ the XAU went from $43 to $230 a 430% over 11 years, Gold went from $240 to $1900 a 690% gain over the same period)

gold stocks clearly did better this time around. 150% gain from 2018 lows to this summer’s peak. but still suffered a 40% drawdown in March.

physical up from 2018 lows 80% again, with NO drawdown.

Better yet, why not own a global ETF that’s diversified across the board? Time proven results.
_____________________________________

sure if you don’t want to think about it. that’s fine. you can happily make 5-7% over the long term if that’s your thing. use a roboadvisor and let the algorithm do it’s thing.

but your response misses the point of measuring the Dow vs Gold. it’s a relative relationship no different that adjusting the DOW vs CPI.

#43 Stan Brooks on 11.28.20 at 4:35 pm

#30 Dogman01 on 11.28.20 at 2:54 pm

Spot on. The question is how you would control the disenfranchised who have no shot on honest success in this life while the privileged one control everything. You can’t. So prepare for the consequences.

Watching from the sidelines with plenty of popcorn.

Cheers,

#44 Faron on 11.28.20 at 4:36 pm

I’ve been touting VVL and EQAL for a few months now. The rotation into value is all the buzz on the “street” apparently. NASDAQ has lagged for three months. If bumps come along and the US locks down, you may see rates fall and a goosing of the NASDAQ relative to value. But, ultimately, the catch up is not in NASDAQ over the long timefeame Doug layed out here. Long fed rates will go up. But maybe need a winter pause as COVID has its (hopefully) last romp.

#45 Cherry pickings on 11.28.20 at 5:29 pm

#42 charts galore on 11.28.20 at 4:03 pm
#36 espressobob on 11.28.20 at 3:25 pm

Yes, gold may have had a better ROI if you look at the 20 year track record. However, that is disingenuous to “cherry pick” lIke that. It reminds me of the mutual fund companies of yesterday that cherry picked their performance by choosing the period that made them shine. If you look at any other time period, gold lost its glitter. 5, 10, 30 year …since record keeping began.

#46 NoName on 11.28.20 at 6:05 pm

@ flop

Did you know that former GE ceo always flu with two jets where ever he went, under excuse that if something goes worong with one he can always switch to second.

Sounds unbelievable but its true…

#47 Camille on 11.28.20 at 6:18 pm

Hello Doug. Thank you for your post.
I knew after so much vaunting of the S&P Montezuma’s Revenge was coming on holding value stocks.
I’m working on holding 1% of my assets in Bitcoin, to be taken out of my gold miner holdings (which also pay nothing). And I’m late.
So any wager on how long before asset managers get tired of being asked if investors should hold bitcoin, and simply give in and hold a small amount in client accounts (instead of saying we got gold, or we hold XIU)?

#48 Nonplused on 11.28.20 at 6:26 pm

#1 Paul on 11.28.20 at 10:01 am
“So pretty much all growth in the dji happened in the last 40 years ? Wow”

It just looks like that because it compounds. 6%/year on $1,000,000 looks bigger on the graph than 6%/year on the initial $10,000.

All compounding series are exponential, not linear. That’s why early investing pays off big if you can do it.

The graph could be plotted logarithmically to show the relative returns better but that confuses half the people too.

#49 Nonplused on 11.28.20 at 6:32 pm

#20 Apocalypse2020 on 11.28.20 at 1:20 pm

“Trump loves it.

And so does Iran, Russia, China, NK and more.”

———————–

Are you a mind reader? I have noticed that mind reading has become increasingly popular not only in this comments section but in the MSM as well. There must be an online course or something.

#50 Catalyst on 11.28.20 at 6:33 pm

Thanks for the post. I think it’s not so much outperformance rather a catchup trade, when value was comotose during the previous 6 months and tech led megacap rally brought the S&P back from the dead.

I do think based on the runup in russell 2k and prevalence of data stocks selling 20-50x revenue that we are due for a big pullback in ‘growth’ but we are also in a weird world where the megacaps are also growth even with 2T valuations and growing 20% a year and abusing their market power unobstructed. We are starting to see global pushback against this whether it be changes in taxation or India banning certain foreign competitors to foster a local tech industry and I think we are in the early innings.

For those interested, I highly recommend a 3 part youtube series from Aswath Damodaran who is an MBA teacher in NY and offers a high quality discussion on the topic.

https://www.youtube.com/watch?v=Iv0zmTmKHYg

#51 HUNGRY BEAR on 11.28.20 at 6:37 pm

DELETED

#52 espressobob on 11.28.20 at 6:42 pm

#42 charts galore

The Dow is a myopic index to base anything on. Commodity plays don’t pay dividend. Corporations do.

There are are many arguments for goldbugs, energy bulls and cryptonites. An elite group, sort of…

Fair enough, go for it, why would I care? Don’t confuse investing with timing. Good luck with that.

https://www.investopedia.com/ask/answers/020915/has-gold-been-good-investment-over-long-term.asp

#53 Dr V on 11.28.20 at 7:16 pm

34 – Hi soggy. My advisor holds the other end of the leash and keeps me from chasing cars and bikes. She helped me choose my one individual equity when things were in the dumps. She told me that one was enough at that time and let the rest of the portfolio do
its thing. I could see owning Manulife, maybe one energy or utility stock and a telecom, though telecoms were pricey last i looked.

#54 Flop... on 11.28.20 at 7:29 pm

#46 NoName on 11.28.20 at 6:05 pm
@ flop

Did you know that former GE ceo always flu with two jets where ever he went, under excuse that if something goes worong with one he can always switch to second.

Sounds unbelievable but its true…

/////////////////////////////

Hey NoName , I looked up the Croatian word for liar( lazljivac), your name didn’t appear in the fine print so I took it to be true.

Then it started to nag at me, so I went behind your back and checked.

You told the truth.

We’re still blog buddies…

M46BC

“Former General Electric CEO Jeff Immelt used to fly with two corporate jets when he would travel, a nearly empty jet following the one Immelt was traveling in, according to a report in The Wall Street Journal.

The Journal, citing sources familiar with the matter, reported that the extra jet was utilized in case there were any mechanical problems with the one Immelt was in.

At times, the alternative jet would park at a distance from the other one to avoid attention, the paper added, and crew members were discouraged from discussing Immelt’s travel arrangements.

GE had spent $258,000 on Immelt’s jet travel last year, with an additional $75,000 for other top executives, the newspaper said. Flannery took aim at the GE air fleet as one of his first cost-cutting initiatives.”

https://www.cnbc.com/2017/10/18/former-ge-ceo-jeff-immelt-used-two-jets-for-business-travel-wsj.html

#55 Sarah Javema on 11.28.20 at 7:46 pm

My opinion, after reading, listening to many regarding about low interest rates, isn’t it irresponsible for commentators like Pattie Lovett-Reid on CTV, BNN and other commentators to tell savers, seniors who only had GIC’s, term deposits, savings accounts, maybe savings bonds, government bonds etc. to now buy corporate bonds short, mid, long term., higher risk yield corporate bonds, principal protected bonds assuming these are principal protected notes with many restrictions, possible fees, possible liquidity issues etc.

Most of these people will lose money because these are totally different investments from guaranteed GIC’s, term deposits, savings accounts under CDIC, DICO etc. and they also differ from the other costs, fees, commissions, other possible restrictions like mid to higher risk bonds being not liquid no buyers so can’t get money or being sold at possible major discounts to get out of these type of corporate bonds, higher yield corporate bonds, PPN’s etc.

Let’s face it, if you only have some retirement money RRSP’s, TFSA’s, some savings accounts, GIC’s, term deposits under $100,000 or $200,000 and have no other net worth besides your equity in your house with debt or even debt free, making 1.5% to 3.0% more interest or return on this will not make much difference. If you make another $3,000 to $6,000 a year interest and is mostly or some taxable that will not do much and with much higher short to longer term risk.

If you did not save enough in the last 25 to 30 years, even normal interest rates of 4% to 5%+ on GIC’s, term deposits, savings accounts etc. or even that with higher interest rate corporate bonds today will not save you or make that much of a huge difference. It is a sad fact but true.

#56 David Davidoff on 11.28.20 at 7:53 pm

DELETED

#57 Faron on 11.28.20 at 8:01 pm

#35 SoggyShorts on 11.28.20 at 3:24 pm

#32 Doug Rowat on 11.28.20 at 3:00 pm
#25 SoggyShorts on 11.28.20 at 1:47 pm

*********************
I think I found a way to check:

VOOG lists 282 Growth stocks
VOOV lists 390 Value stocks
VOO lists 508 stocks

So by cross-referencing those lists it should be possible to figure out what % of VOO (the S&P 500) is made up of each, right?
At least as far as S&P and Vanguard define the term?

I downloaded the holdings and cross checked them in the R programming language. Here are the results:

All of the names in VOOG are in VOO
All but three of the names in VOOV are in VOO. The three that aren’t: “Kohl’s Corp.” “H&R Block Inc.” “Coty Inc. Class A”

163 names are in both VOOG and VOOV. Obviously the weights are different where there are commonalities..

The common names in VOOG and VOOV account for 35.9% of VOOV and 29.1% of VOOG.

Top ten names by weight in VOOV in common are: “JNJ” “JPM” “PG” “KO” “PEP” “MCD” “MRK” “DIS” “CMCSA” “HD”

Accounting for 10.7% of the fund

Tot ten names by weight in VOOG in common with VOOV are: “HD” “PG” “JNJ” “JPM” “DIS” “ABT” “CMCSA” “INTC” “MRK” “NKE”

Accounting for 8.2% of the fund

So, you get some value in your growth and some growth in the value. Now you know.

#58 Faron on 11.28.20 at 8:04 pm

#54 Flop… on 11.28.20 at 7:29 pm

#46 NoName on 11.28.20 at 6:05 pm

Kinda weird coming from one of the principle makers of jet engines…

#59 Flop... on 11.28.20 at 8:05 pm

I’ve told a few stories on here about my time working on Billionaire’s Paul Allen properties.

I only worked on two, the one in England and the one in France.

My previous post about having something as a back-up got me thinking about this situation that used to happen on a regular basis.

I would look out at the Mediterranean in the South of France and see Paul Allen’s honking huge 414ft yacht, I think it was the biggest private vessel at the time on the planet, just sitting in the bay with the helicopter coming and going.

I would ask security if they were coming to the villa, because then different protocols were in place.

No, not today.

One time, I came to work and after a couple of weeks the boat was gone and they hadn’t visited the villa the whole time.

I wondered why they would set anchor there, when there was a whole world to explore.

Apparently he liked having the villa there just in case.

For back-up…

M46BC

P.S, this was in 1999/2000 there were rumours of a yacht rivalry between Paul Allen and Roman Abramovich way back before this article was written…

https://www.dailymail.co.uk/news/article-1385267/Roman-Abramovich-Microsoft-bosss-billionaire-battle-boats.html

#60 Karen on 11.28.20 at 8:53 pm

Bank fraud 101

https://www.bnnbloomberg.ca/bank-of-canada-chief-defends-bond-purchases-from-political-attacks-1.1528294

Get a politically motivated BOC gov and a Tweedle Dee PM and what do you get?

#61 Doug Rowat on 11.28.20 at 8:56 pm

#22 SOMETHINGS UP! on 11.28.20 at 1:30 pm

WOW….Look at that chart!

Looks like a BUBBLE about to burst.

—-

Growth stocks shouldn’t be abandoned entirely. As I point out on page 2 and 3 of the below, when it comes to bubbles, looks can be deceiving:

http://www.turnerinvestments.ca/pdfs/Bubble-Baths-Feb2016.pdf

—Doug

#62 crowdedelevatorfartz on 11.28.20 at 9:39 pm

Aaaaand in the Lower Brain land we have the bizarre spectacle of anti Chinese communist protesters beating other anti Chinese communist protesters in a quiet residential neighborhood ……… as the RCMP and local politicians wash their hands…….

https://www.vancourier.com/sports/chinese-communist-party-protest-in-surrey-turns-ugly-1.24245976

When does the Cullen Commission into money laundering in BC reconvene ?

#63 Doug t on 11.28.20 at 10:28 pm

#30 Dogman

BINGO we have a winner

#64 PastThePeak on 11.28.20 at 10:31 pm

In response to yesterday’s post…

…just sold the last of my “traditional” equities in the non-reg portfolio (only preferred shares remain).

Now all my investments are in RRSP, TFSA, or a vault…

#65 Tommy on 11.28.20 at 11:13 pm

Metro Vancouver board of directors chair Sav Dhaliwal says racism is thriving in Canada, a serious problem that will continue to fester unless more people call out the harmful behaviour.

“Racism is alive and thriving, and not to see it or not to acknowledge it is a neglect of our moral duties as human beings,” he said Saturday, as Metro Vancouver wrapped up its four-part series of online forums to discuss systemic racism and develop strategies to address the long-standing issue.

https://vancouversun.com/news/racism-is-thriving-in-canada-and-it-must-be-challenged-says-metro-vancouver-chair

#66 Stan Brooks on 11.28.20 at 11:43 pm


#60 Karen on 11.28.20 at 8:53 pm
Bank fraud 101

https://www.bnnbloomberg.ca/bank-of-canada-chief-defends-bond-purchases-from-political-attacks-1.1528294

Get a politically motivated BOC gov and a Tweedle Dee PM and what do you get?

These guys are either delusional, incompetent or both, as it seems.

Apparently when you increase the M2 money supply by 22 % so far, M1 by 30 % in a single year by solely subsidizing the delusional budget deficit, purchasing 100 % of government bonds when no one else wants them by the ‘central bank’ you get no inflation and that will show up sometimes in 2023?

Economics 101 question for dummies/grade 8:
what happens when more money are chasing significantly less goods (with the economy shut down) and the insane money printing?

Monetary inflation first, price inflation second.

Few things are worrisome:

1. The statement that it is in bank mandate to guarantee inflation. It is to guarantee price and currency stability and limit inflation, not to boost it.

Stating that we need 2 % inflation while underreporting it and keeping rates at zero is NOT price and currency stability.

2. The statement that the bank is not subsidizing the deficit and has in it’s mandate the purchase of bonds and that purchase is not inflationary anyway is a triple lie.

Cheers,

#67 SoggyShorts on 11.29.20 at 1:30 am

#57 Faron on 11.28.20 at 8:01 pm
#35 SoggyShorts on 11.28.20 at 3:24 pm

#32 Doug Rowat on 11.28.20 at 3:00 pm
#25 SoggyShorts on 11.28.20 at 1:47 pm
**********************
Thanks for that!

Do you also have the reverse data?
I mean what VOO consists of then?

You mentioned that basically all of VOOV and VOOG are in VOO, but is the reverse also true or does VOO have significant holding any that are in neither of the others?

Assuming that all or nearly all of VOO is made of companies in VOOG/V, then do you have the following data:

What % of VOO is Growth?
What % of VOO is Value?
What % of VOO is the overlapping stocks?

That’s the critical piece I am after since most of my PF is in VOO and I don’t even know the split.

Thanks again, I would have had to do this in an amateurish google sheet

#68 NSNG on 11.29.20 at 1:34 am

#62 crowdedelevatorfartz on 11.28.20 at 9:39 pm

Aaaaand in the Lower Brain land we have the bizarre spectacle of anti Chinese communist protesters beating other anti Chinese communist protesters in a quiet residential neighborhood ……… as the RCMP and local politicians wash their hands…….

https://www.vancourier.com/sports/chinese-communist-party-protest-in-surrey-turns-ugly-1.24245976

====================================

Posted in the ‘sports’ section in the courier for some reason.

LOL!

#69 My new beard is girlish and looks stupid on 11.29.20 at 3:02 am

Here’s a weird one. I bought NTR a month ago at $46.40. Today it’s worth $ 64.40 !!! Adding up !

Tax selling season is here. Loving the beat up value at this point. Already depressed AND great dividends !!! Oink Ounk. It’s time to snarfle me some XMAS joy juice.

#70 BillyBob on 11.29.20 at 4:25 am

#58 Faron on 11.28.20 at 8:04 pm
#54 Flop… on 11.28.20 at 7:29 pm

#46 NoName on 11.28.20 at 6:05 pm

Kinda weird coming from one of the principle makers of jet engines…

===================================

(“principal”)

I’ve sat over 8,000hrs in front of GE90-115B engines. Absolute engineering masterpieces. Instant thrust response which is almost miraculous considering the inertia of a fan 3.3 metres wide and an engine producing 115,000 lb of thrust (B777-300ER). Never let me once down in over 12 years. Landing in places with sandstorms and typhoons it was supremely confidence-building to have all that power on tap, immediately, every time.

https://en.wikipedia.org/wiki/General_Electric_GE90

Also flew Rolls-Royce powered variants of the B777 and B787…ugh. Underpowered, unreliable, laggy thrust response due to their outdated 3-spool design. RR Trent 1000…utter garbage. Mates of mine had one blow on their departure out of FCO last year, shedding hot metal on the surrounding area.

Of course news like that goes down the line. So when our ground engineer greeted us in JFK my first question was “Say, does this mean we’re now the largest Rolls Royce parts distributor in Italy”?

He didn’t think it was funny. Too soon?

And that incident is only the tip of the iceberg. As the wiki page says, “The engine suffered other less publicised in-flight shutdowns.” Our company had multiple ones, including over the Atlantic mid-crossing. Not much fun limping into Gander or Keflavik on one engine. It’s been an ongoing nightmare for years, even has it’s own damage-control PR webpage.

https://www.rolls-royce.com/products-and-services/civil-aerospace/airlines/trent-1000-updates-hub.aspx?#/

Point is, Immelt’s jets were Bombardier Global Express which have the Rolls Royce BR700 engines.

So maybe he wasn’t so crazy after all.

#71 Ordinary Blog Dog on 11.29.20 at 8:41 am

Thanks Doug, nice coverage on that. Appreciate the insight. What is the definition of a growth stock? I think it is obvious from the article – but I could be missing something.

#72 NoName on 11.29.20 at 9:46 am

@billy bob

Here it is real flying no engine, no trust, no spinning parts. Time for you to look for local club that have blanik L13 or dg500. No better feeling than when you sea vings bent all the way up buy you a steel down…

Look how good is this dude, flys and plays a flute at same time. :-)

https://www.youtube.com/watch?v=pLGH4u4NoAM&t=773s

#73 Dharma Bum on 11.29.20 at 9:57 am

#28 Jaguar

p.s. That isn’t Dharma Bum’s kid in the photo again, is it? Mercy.
——————————————————————–

Nope.

My kid’s way better looking.

#74 Dharma Bum on 11.29.20 at 10:07 am

#69 My new beard is girlish and looks stupid

Here’s a weird one. I bought NTR a month ago at $46.40. Today it’s worth $ 64.40 !!!
——————————————————————–

Are you sure? Maybe it’s just your dyslexia acting up.

#75 TurnerNation on 11.29.20 at 10:28 am

That dog in the photo should be shorn. To Stop The Spread of Covid®.
Someone told me they trimmed their fingernails short. A a public health nurse told their business to do so.
What’s next state-mandated short hairstyles?
Prison style. You see the New System ?
Every waking minute you spend must be dedicated to Stopping The Spread.
NO fun allowed in the New System Comrade.
All culture and events cancelled.
Want to have fun and listen to the radio? Nope. The DJ and ads blare: don’t go see your family. Zoom only. Else you may never see them again says the ads.

This is war. Replete with non stop air raid sirens. But you should still stop at Costco. Walmart and Sloblaws.

Of course on 3/11 this year the WHO declared this globally.
I found out that Fukushima was… Friday 11 March 2011.
Always with the 11s with these big global events.
Today a 9/11. Daily terror incoming – so we lock down society:

“COVID-19: B.C. health officials announce record 911 new cases amid ‘our COVID storm'”
“Most of the deaths reported Friday involved individuals living in long-term care, Henry said, fighting back tears. The majority of the 395 dead in B.C. from the coronavirus have been in their 70s or 80s.”
https://archive.is/RDYKT#selection-1975.0-1975.84

#76 crowdedelevatorfartz on 11.29.20 at 10:39 am

@#65 Tommy
“Metro Vancouver board of directors chair Sav Dhaliwal says racism is thriving in Canada, a serious problem that will continue to fester unless more people call out the harmful behavior.”
++++

More politically correct doublespeak from the pablum eaters.
You cant legislate how people think with more and more Laws.
They just shut up.

As famed architect Arthur Ericcson once said back in the 1970’s when asked about Pierre Trudeau’s multiculturalism immigration policies
,
” Well either we will have the world’s most beautiful multicultural offspring….. or the worst race riots Canada has ever seen.”

He also predicted in the 1980’s that Vancouver’s Lower Mainland would have 10 million people by 2050…. and everyone laughed.
If commuters think we have gridlock now…..just wait another decade or two.

#77 TurnerNation on 11.29.20 at 10:53 am

^ To my point. MITTENS have now been deputized (demonized) in the War. Be afraid, very afraid of these lurking softies:

I implore you, Cast out your mittens with their unclean knit! Else you will be smited by the omnipresent CV. Repent and toss your mittens into the pyre.
No fun allowed; change your ways; government approved handwear only. Scour your closed to Stop the Spread ®
It follows that, housepets will be banned one day. Just watch em.

https://www.theweathernetwork.com/ca/news/article/experts-weigh-in-are-mittens-really-covid-19-spreaders-coronavirus

#78 crowdedelevatorfartz on 11.29.20 at 10:53 am

Cullen Commission testimony .

“Its not Money Laundering, people deal in cash for cultural reasons…..”

https://www.newwestrecord.ca/cultural-reasons-for-chinese-nationals-using-underground-banks-commission-hears-1.24236343

One wonders when a slick lawyer will file a challenge to the Canadian Charter of Rights asking that the govt return seized cash….

#79 Doug Rowat on 11.29.20 at 12:28 pm

#47 Camille on 11.28.20 at 6:18 pm

So any wager on how long before asset managers get tired of being asked if investors should hold bitcoin…

I’m tired of it.

—Doug

#80 Dogman01 on 11.29.20 at 12:44 pm

#43 Stan Brooks on 11.28.20 at 4:35 pm

“The question is how you would control the disenfranchised who have no shot on honest success in this life while the privileged one control everything.”

————————————————–

– Use the MSM to feed them the narrative you need them to hear
– Offer no Financial education (but lots of easy credit)
– You manipulate Inflation numbers
– Distract them with Climate Change, Wokeism, give them a cause to focus their sense of unfairness
– Divide and distract them with Identity politics
– Get them to love their small apartments and accept their inability to afford a vehicle as an environmental virtue.
– Ensure if they want to get ahead they can only have a narrow range of opinions (this keeps any with leadership competency in the box)
– Offer Red Tie\Blue Tie Political alternatives and maintain their engagement
– Lots of immigration and precarious work situations (keep them financially insecure knowing there are a lot of others whom are more desperate then they are and will take their job)
– Maybe a UBI if you have to go there.

Bread & Circuses – keeps the plebs in their place.

If the situation gets bad use Fear:

https://www.youtube.com/watch?v=PHlLk5m0S4o

“And the things that we fear are a weapon to be held against us”

#81 Faron on 11.29.20 at 1:47 pm

#67 SoggyShorts on 11.29.20 at 1:30 am

#57 Faron on 11.28.20 at 8:01 pm
#35 SoggyShorts on 11.28.20 at 3:24 pm

#32 Doug Rowat on 11.28.20 at 3:00 pm
#25 SoggyShorts on 11.28.20 at 1:47 pm


NP

Alrighty:

So, 506 of the names in combined voog and voov are in voo leaving two that aren’t. Those two are:

“BRK.A” “WH”

BKB.B is in the others, so I imagine that difference doesn’t amount to much.

For the weights:

56.5% of voo’s weight is also in voov
74.5% of voo’s weight is also in voog

that excess in the growth portion has probably grown over the past year.

And, I think the number you are really looking for:

31.7% of voo’s weight is in the 162 names that overlap voog and voov.

with code if you can be bothered. You need to go to Vanguard institutional to get the spreadsheets with all the names in the funds. Download and clean up the tables by removing leading rows and the trailing summaries of the non-equity positions (which are very small):

The following may not show if Garth doesn’t have the code tags enabled in commenting here.


> voo voog voov voogvoov sum(unique(voogvoov$Ticker) %in% voo$Ticker)
[1] 506
> voogvoov$Ticker[which(!(voogvoov$Ticker %in% voo$Ticker))]
[1] "KSS" "HRB" "COTY"
> sum(voo$X..of.fund.[which(voo$Ticker %in% voov$Ticker)])
[1] 56.49479
> sum(voo$X..of.fund.[which(voo$Ticker %in% voog$Ticker)])
[1] 74.47839
> all(voo$Ticker %in% voogvoov$Ticker)
[1] FALSE
> which(!(voo$Ticker %in% voogvoov$Ticker))
[1] 470 508
> voo$Ticker[which(!(voo$Ticker %in% voogvoov$Ticker))]
[1] "BRK.A" "WH"
> voovinvoog vooginvoov sum(voo$X..of.fund.[which(voo$Ticker %in% vooginvoov$Ticker)])
[1] 31.65062

#82 Faron on 11.29.20 at 1:51 pm

That code is garbled. R uses operators that look like html tags. Lets try escaping them:


\> voo \ voog \ voov \ voogvoov \ sum(unique(voogvoov$Ticker) %in% voo$Ticker)
[1] 506
\> voogvoov$Ticker[which(!(voogvoov$Ticker %in% voo$Ticker))]
[1] "KSS" "HRB" "COTY"
\> sum(voo$X..of.fund.[which(voo$Ticker %in% voov$Ticker)])
[1] 56.49479
\> sum(voo$X..of.fund.[which(voo$Ticker %in% voog$Ticker)])
[1] 74.47839
\> voo$Ticker[which(!(voo$Ticker %in% voogvoov$Ticker))]
[1] "BRK.A" "WH"
\> voovinvoog \ vooginvoov \ str(voovinvoog)
'data.frame': 163 obs. of 6 variables:
$ SEDOL : chr "2475833" "2190385" "2704407" "2206657" ...
$ Ticker : chr "JNJ" "JPM" "PG" "KO" ...
$ Holdings.name: chr "Johnson & Johnson" "JPMorgan Chase & Co." "Procter & Gamble Co." "Coca-Cola Co." ...
$ Shares : int 195104 202476 133601 296357 91994 53240 145417 90026 256273 39882 ...
$ Market.value.: chr "$26,750,709.44 " "$19,850,747.04 " "$18,316,697.10 " "$14,242,917.42 " ...
$ X..of.fund. : num 1.968 1.46 1.347 1.048 0.902 ...
\> str(vooginvoov)
'data.frame': 163 obs. of 6 variables:
$ SEDOL : chr "2434209" "2704407" "2475833" "2190385" ...
$ Ticker : chr "HD" "PG" "JNJ" "JPM" ...
$ Holdings.name: chr "Home Depot Inc." "Procter & Gamble Co." "Johnson & Johnson" "JPMorgan Chase & Co." ...
$ Shares : int 194461 367410 281363 372171 280476 261297 649526 616812 353951 212206 ...
$ Market.value.: chr "$51,864,693.31 " "$50,371,911 " "$38,577,680.93 " "$36,487,644.84 " ...
$ X..of.fund. : num 1.23 1.195 0.915 0.865 0.806 ...
\> sum(voo$X..of.fund.[which(voo$Ticker %in% vooginvoov$Ticker)])
[1] 31.65062

#83 Tom Dehoja on 11.29.20 at 1:51 pm

Karen, I remember all that public relations fakeness in the 80’s, 90’s, early 200’s about that central banks were independent of the government. I knew it then and I knew it now, they were try to convince that they were separate.

It was not true as just like they understate the inflation numbers and manipulate many statistics, figures, numbers all the time for decades now.

#84 Faron on 11.29.20 at 1:55 pm

#70 BillyBob on 11.29.20 at 4:25 am

#58 Faron on 11.28.20 at 8:04 pm
#54 Flop… on 11.28.20 at 7:29 pm

#46 NoName on 11.28.20 at 6:05 pm

https://www.rolls-royce.com/products-and-services/civil-aerospace/airlines/trent-1000-updates-hub.aspx?#/

Point is, Immelt’s jets were Bombardier Global Express which have the Rolls Royce BR700 engines.

So maybe he wasn’t so crazy after all.

Cool information. Very few people can speak to the performance of several jet engines based on lived experience!

That makes sense. A CEO has to represent the brand and maybe doubling up was his way of showing GE’s superiority.

Hope some folks bought GE at it’s recent bottom. Doing quite well now.

#85 Eco Capitalist on 11.29.20 at 6:26 pm

@ #80 Dogman01

“And the things that we fear are a weapon to be held against us”

If you’re going to quote song lyrics, shouldn’t you be citing the source?

Song: The Weapon
Album: Signals
Artist: Rush