The Cyclical Nature of Value Investing

Mid-Year 2017 Insights

The Cyclical Nature of Value Investing

One of my favorite things about working on the value side is that—to a large extent—it doesn’t matter what big events are swaying the market. OPEC’s oil freeze? Rising interest rates? Amazon’s purchase of Whole Foods? These are all things we keep on the radar, but they’re not going to make a huge impact to my team’s immediate investment choices because we’re looking at a longer time horizon that could last up to five years or more. And, in my experience, mean reversion is a powerful force.

As a bottom-up investor, we’re evaluating options based on fundamentals. By that, I mean we look at investment opportunities based on companies with good track records over time, good balance sheets and good returns on capital. With that in mind, I see attractive risk/rewards in two sectors right now: energy and financials.

In the video below, I go into more detail on our approach and my thoughts on FANG stocks (Facebook, Amazon, Netflix and Google) in particular.

References to specific securities are for illustrative purposes only, and are not intended as recommendations to purchase or sell securities. Opinions and estimates offered constitute our judgment and, along with other portfolio data, are subject to change without notice.

The opinions expressed are those of Mike Liss and are no guarantee of the future performance of any American Century Investments fund.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

SHARE
Previous articleLots of News, But Little Volatility
Next articleTop 7 Retirement Life Hacks
Mike Liss
Mike Liss is a Vice President and Senior Portfolio Manager at American Century Investments. He is a member of the team that manages the American Century, Equity Income, Market Neutral Value, Mid Cap Value and Value portfolios. As a torchbearer, Mike helped carry the Olympic flame through Kansas City as it made its way to the 2002 Winter Olympics in Salt Lake City.