Thread by @NeckarValue

"There are two good times to be an investor: when valuations are low overall, and when dispersion is high." by @ByrneHobart
"There are times when the overall market is expensive, but the cheapest assets out there are really incredibly cheap."

"the heyday of value investing in the 50s and 60s, one of the things that stands out is that they were able to find tiny cheap companies with high-quality economics and good management teams. Not only was the market for stocks inefficient, but the market for talent was, too."

Vs. today
"the statement “this small, obscure company is in a good business, is well-run compared to its peers, and looks quite cheap” requires a lot of explaining, because so many forces conspire to ensure that sufficiently good companies remain neither small not cheap for long"

"Part of the reason stocks were cheap and inefficiently priced in the 1940s was that there wasn't a lot of upward mobility in management in the preceding decades, so the people in charge were disproportionately likely to be the ones who had survived the Great Depression"

"the reason the 50s were so great for value investors was that in the 1960s, so many conglomerates grew by acquiring cheap companies, many of which were public. So there was an actual catalyst."

"The same thing applied in the 1980s with private equity, and again in the 2000s. Cheap stocks arise from the absence of the various forces that push their prices back to their fundamental values."

"value investing turns out to be something like a macro play: finding underpriced stocks is a lot of the work, but a big component of the returns is finding a reason they'll trade where they should."

thediff.co/p/what-happene…