Economics
Pandemic Created Value Disparity Reminiscent of Tech Bubble
- Gap between value and growth stocks are at an all-time high
- Value-oriented money manager sees attractive opportunities
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The Covid-19 pandemic has punished already cheap value stocks and rewarded growth stocks with even higher premiums, creating a gap not seen since the tech bubble in 2000.
During a time of uncertainty, such as the market currently faces, investors usually flock to companies with higher visibility and internal growth, ignoring valuation, while leaving behind stocks that are more sensitive to the global economy. “The market is willing to pay higher and higher prices for visibility, growth and for comfort, which made growth stocks rise even higher,” Brent Fredberg, an analyst at Brandes Investment Partners LP told Bloomberg in a phone interview.