Market Commentary | August 24, 2025

Potential Signs of a Value Renaissance

Value and growth have bounced cyclically in and out of favor for the entire history of the stock market, often in unpredictable fashion.  Outperformance of value or growth over the other varies in both duration and magnitude. 

Nobel prize winner, Eugene Fama, along with Ken French, put out famous research demonstrating that over long periods of time value and small cap tend to outperform.  The last few years have gone the other way with large cap and growth/momentum materially beating value and small cap.

History teaches us that the pendulum will always swing back toward the mean, but unlike the arc of a physical pendulum with a discernable apex, it is tricky to determine when the tides will turn.

Last week may have been the turning point

We normally read short-term market price movements as noise, but the action in the week ended 8/22/25 was so comprehensive that it might be something more.

In the 5 market days ended 8/22/25:

• Russell Value ETF (IWN) was up 4.32% while the Russell Growth ETF (IWF) was down 1.2%.
• REITs were up 3.14%
• Big Tech, as measured by QQQ, was down 0.89%
• Speculative bubble stocks started coming back down to earth
• Consumer Staples and Utilities outperformed

These moves all point to a renewed pragmatism –  stable, reliable cashflows are starting to be preferred over speculative potential. 

It was much more than just the dovish results of the Fed’s Jackson Hole meeting.  These market moves were present both before and after.

We can never be certain from just a few trading days, but we think the coming months will be a good time to be value investors. Your capital is invested in strong, cashflowing businesses trading at attractive valuations.   The sort of action the market gravitated to this past week bodes well.

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