Key insights
- The author argues that traditional value investing is no longer effective in the current market dominated by tech and growth stocks. They suggest switching to an index-dominated portfolio, as even Berkshire Hathaway struggles to outperform. The increasing concentration of the S&P 500 in top tech stocks makes it essentially a Nasdaq holding, rendering value strategies less competitive.
Traditional Value investing is dead. Go read what is traditional vs new age value growth investing or whatsoever without a title .
Since Charlie Munger’s influence took hold, Warren Buffett has shifted to a strategy that is effectively 80% growth and 20% value.
Even the pre-tech era value gurus, such as Joel Greenblatt and Seth Klarman, have transitioned into "index fund leeches."
The top 100 stocks in the S&P 500 now hold a 75% weightage, making it essentially a QQQ (Nasdaq) holding.
Consequently, the index benchmark for this era is tech.
Whether it is a value stock with no growth or a high-quality non-tech stock with 10–15% revenue growth, it is difficult to compete with "moatless" compounders growing revenue at 20%.
Competing against the Magnificent Seven, which combine massive moats with high compounding, is even harder.
Even Berkshire Hathaway’s insurance structure, which provides a float that effectively acts as 30% leverage, is failing to beat the index. A retail investor without access to such a float must discount their maximum talent capacity by 30%.
My recommendation: Switch to an index-dominated portfolio and view your past efforts in value investing as a "sunk cost knowledge fee. Continue value investing on minority . It’s always cool to discuss none performing asset stock deeply researched .