Rationalizing the Irrational: Video Highlights – Causeway Capital

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Despite having beaten growth stocks at their own earnings growth game since 2009, current market multiples for the MSCI Value indices suggest negative perpetuity growth for value stocks across all global geographies. Watch video highlights of our research on the irrational implications of the current gap in value and growth multiples.

Key insights

Since the market trough in 2009, global growth stocks have rerated sharply upward while value stocks have been left behind
Value stocks have surprisingly grown their earnings faster than growth stocks over the same period of time
Market multiples for the MSCI Value indices currently imply negative perpetuity growth for value stocks across all global geographies, even as the world economy is forecast to grow
To us, this is further evidence that the market has become irrationally optimistic about growth stocks relative to value stocks, and a reversion to the mean appears inevitable

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