Value vs. Quality | Snippet Finance

Markets have a tendency to push prices further than anyone thinks.
As Keynes said “The market can stay irrational longer than you can stay solvent”.
Markets also have a tendency to snap back against trends – often violently.
A painful example of this has been value stocks.
The last few years have seen value stocks underperform strongly while quality has been relentlessly bid up.
This has cost many value investors, including some titans of the industry, as the trend persisted and persisted.
The last two weeks have been an example of a violent reversal.
On a long-term valuation chart (below) it looks like a blip – the valuation dislocation built up over the last many years is still present.
Is it the start of a trend or just a counter trend move?
h/t Soc Gen Research via FT Alphaville.