Features

To Anthony Maramarco, an informed investor, a renewed appreciation of value can be observed in America today, and the stock market reflects it. Value investing, he says, is back on the front burner. 

It shouldn’t be a surprise, he suggests, because if you keep your eyes open you can see a return to basics everywhere. Value is back as certainly as is good, old home-cooking. 

“To understand what’s cooking in the stock market today,” he said, “consider that one of the hottest items on the menu at Boston’s trendy Grill 23 is meat loaf and mashed potatoes.” 

That menu is as basic as building a portfolio of stocks that are managed well, that have a viable business plan, good products, and earnings and dividends rather than just a story and promises of someday connecting. 

Maramarco is an analyst at David L. Babson & Company, which began managing stocks at the tail end of the Great Depression, way back in the pre-technology days. Understandably, he sees value as the way to go. 

George Gilder is far from convinced. Gilder, is the author of the “Gilder Technology Report,” a newsletter providing deep insight into about 40 high-tech, New Economy corporate leaders – creators of the “Telecosm.” 

Gilder’s awesome influence can be measured by the quick upward thrust of stocks that managed to get newly added to his list. He is followed not just in Silicon Valley but in high-tech mountains and valleys everywhere. 

While the Warren Buffetts and other value investors are “giddy with vindication” these days, he says, the upcoming “new phase of wealth creation .....will leave the Buffetts in the dust.” 

He believes the crash of tech stocks has even been helpful. How? “By shaking out flakier firms, technologies and business models,” leaving the strong survivors to lead the way into phase two of the “Telecosm.” 

Telecosm is the world of electronic communications, wired and wireless, that Gilder is convinced will continue to change the world. He believes that, with powerful backing from venture capitalists, technology’s creations will make the next decade even more promising than the last. 

Though Gilder claims not to choose stocks but simply to identify technology companies capable of making profound changes, most readers recognize that such companies are likely to earn big dollars doing so. 

And, while recognizing the powerful possibilities of technology, Babson has a long tradition of valuing companies by more classic methods, putting a premium on the historical ability to report consistent profits. 

As such, the two represent decidedly different views of what investors should do today. And for those who look to others for assistance in making decisions, that creates a dilemma. 

In fact, you can say it’s the dilemma of the entire market: Which is the way to go – value or growth. Growth had been the way of the market for several years. Things changed. Is growth or value the way of the future? 

A widely accepted view of the current market is that it cannot rise with any consistency until all belief is driven out of investors who placed their faith in the New Economy. 

Unconvinced, Gilder remains firm in his faith in technology and growth, saying “It takes technology and innovation to make an economy grow and to sustain the value of ’value’ investments.” 

Maramarco concedes that “it’s important to realize that each style works well in the long run.” But many investors still don’t have a long-term view of things. Not after years of thinking short-term. 

But clearly, his leaning is toward value and the long-term. 

“As tempting as eating out at a Michelin 3-star restaurant every night might seem,” he said, “sometimes you might just want to have meat loaf and mashed potatoes for dinner.” 

John Cunniff is a business analyst for The Associated Press