Question: Is it harder to find decent value in today’s market?
Answer: “It depends on how you define value. Value is relative to something else. In a period when you have short-term investments such as Treasuries with zero risk that pay zero, an average-risk equity that’s paying more than 2% a year in dividends and growing earnings 5% to 6% a year plus a bit of PE appreciation – that’s a pretty attractive holding.
If you look back to the 1950s, the Standard and Poor’s 500 stock index was yielding 3% when government bonds were yielding 2%. It was so easy to be an investor back then. I thought we’d never see it again: You got more current yield from dividends than from a bond, with the expectation that the dividend would rise over time. The same is true now. Instead of people thinking this is the greatest thing since sliced bread, they worry that the market is overpriced.”
Bill Nygren, CFA, manager of the Oakmark Select Fund since 1996, interviewed by Investment News, July 1, 2016. Nygren has one of the top long-term investment track records in the U.S, with his fund ranking in the seventh percentile of large-company value funds over the past 15 years.