James Mackintosh

speaker

379 appearances 7 recordings 1 series first heard Nov 2017 last heard Nov 2024

James Mackintosh’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Growth Stocks vs. Value Stocks: Where's the Smart Money? · 29 Nov 2017 podcast

And if that's the case, then there's nothing to worry about.

Well, it's not so much that they see a market top, I don't think, because if you were seeing a market top, then the last thing you'd want to own is the companies that are sort of most exposed in this sense.

You'd want to be in very defensive, boring companies that are making their profits now rather than making their profits far in the future, because when you get market tops and the market starts going down,

than companies whose profits are far in the future, which of course is for growth companies precisely what's going on with them.

They're expected to grow their profits fast, so they're valued for stuff a long way out in the future.

Those are the last things you want to own if the market's collapsing.

Yes.

It's not that investors see this as that happening, but some people do.

I mean, investors as a group clearly don't because otherwise they wouldn't be rushing out and buying them.

So investors taken as a whole have absolutely been buying these growth stocks.

So they clearly don't think that there's a market top coming.

Now, if they're wrong, then I think it'll be very painful because if this is just froth and exuberance, then the expectation would be a sharp correction.

which we've had a few times in recent years where we had a little bit, nothing like as exuberant as this, but we had in certain sectors things like this going on.

So with biotech, for example, we had a very rapid run-up and then a very rapid drop-back briefly, and that can be very painful.

You tend to get, after a very rapid run-up, if it turns out not to be sustainable, then the correction can be very painful for those within those sectors or

in this case, within growth stocks.

Well, there's a fairly fierce debate with some nasty accusations thrown around between some of the quantitative managers who look at the value of value.

So whether this is the question of saying, well, let's start with a couple of definitions.

So value stocks are those which are cheap.

That's how you define them, typically on measures like price to book and other measures like that.

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