IN APRIL 1962, Joan Whitney Payson watched the New York Mets, a collection of cast-offs from rival baseball teams, lose their first ever game. Mrs Payson, the Mets’ owner, soon left for a summer in Greece. News of further defeats reached her by telegram. So she asked that she be told only when the Mets won. “That was about the last word I heard from America,” she recalled. The Mets lost 120 of their games that year.
One of the worse things about a losing streak, noted Mrs Payson, is you can never tell when it will end. Investors in “value” stocks know the feeling. These stocks, which are distinguished by a low price relative to the book value of a firm’s assets, have fared badly in the past decade (see chart). A longer run of history, as well as intuition, suggests that buying shares that are cheap relative to their intrinsic worth should eventually pay off. But it can be a long wait before the telegram arrives.
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