Richard Bernstein: Value Outperforming Growth in 2021

Published on
December 7th, 2020
49 minutes

Richard Bernstein: Value Outperforming Growth in 2021

Investment Ideas ·
Featuring Richard Bernstein

Published on: December 7th, 2020 • Duration: 49 minutes

Richard Bernstein, CEO of Richard Bernstein Advisors, joins Real Vision managing editor Ed Harrison for a conversation about his investment outlook for 2021 and why he anticipates a year of immense change with a potential surge in earnings and growth rates for small-cap companies. He sees the narrow leadership in the stock market led by large-cap technology stocks ending as cyclicals and value stocks gain momentum. He warns of bearish event risk in tech like antitrust action that will impact companies’ earnings growth potential. Another reason small-cap looks good to Bernstein is because he sees globalization contracting, which will benefit companies leveraged to domestic economies. Filmed December 3, 2020. Key Learnings: When it comes to asset allocation, Bernstein says investors want to choose value over growth as well as focus on small to mid-cap companies, and he explains why now might be the time to invest in non-U.S. companies. He also recommends keeping an eye on municipal bonds as they might be mispriced, and he likes gold as a hedge against inflation and uncertainty.



  • CL
    Chris L.
    8 December 2020 @ 18:14
    Am I missing something? Unless this video was filmed about 3 months ago this guy is trying to pass his idea off as contrarian in one of the most obvious and crowded trades at the moment (value over growth). I think its an idea with merit as it has performed great the last 3 months and may very well overpeform but to pass it off as contrarian is not being transparent and is absolutely ignoring the positioning of most funds. With that being said, happy with the video overall and had some good information.
    • MF
      M F.
      14 December 2020 @ 06:17
      i thought exactly the same..i had to double check the date..yes..its good content, but isn't at least 2/3rds of this argument priced in?
  • NZ
    Nathan Z.
    9 December 2020 @ 17:18
    How is globalization contracting exactly? I get that protectionism is trendy, but will american buy less anazon products made in China in 2021?
  • AK
    Arthur K.
    8 December 2020 @ 16:32
    5 Minutes in, had to give 👍
  • AH
    Andreas H.
    8 December 2020 @ 12:06
    Very good one!!!
  • ML
    Murali L.
    8 December 2020 @ 05:59
    Richard Bernstein always has sage advice. Unfortunately, we have a Fed standing there with a fire hose of liquidity that anything will go
  • TS
    Theodoros S.
    7 December 2020 @ 20:55
    It looks like gold is the "passepartout" for every Quad of the economy. I have not hear anyone saying that he or she is short gold for example...
    • AI
      Andras I.
      7 December 2020 @ 23:18
      There are a few that are short at least short/medium term due to rising real rates - eg. Hedgeye is recommending to actively short gold and gold miners (GDX). But they can turn on a whim and long term it's hard to find any negativity (other than JP Morgan was forecasting $1600 for next year - but that's JP Morgan).
    • DS
      David S.
      8 December 2020 @ 00:35
      Andras I. - I am hoping for gold miners' cash flows at these gold levels or a little lower. Maybe the rush to Bitcoin is keeping gold somewhat down.. DLS
    • AI
      Andras I.
      8 December 2020 @ 02:51
      David: I'm not sure I fully agree with Hedgeye on this (or maybe it's just a time frame difference) - but also they're mostly running on correlation dynamics at this point, when calling this, there was no mention of policy (debasement, yield curve control.. Etc) recently. A few of observations from my part: 1, The way I see is that all the metals are aligned on an axis of industrial<->store of value with gold being on one extreme and things like copper on another. Right now it seems to me that the risk is weighted towards the SoV extremity, so gold is more at risk. Recent price action and (relative) stability in silver and platinum and outprerformance of copper kind of confirms this. So I'm not really bearish on gold but I see it as more at risk and I'm holding a mix more diversified along this axis. 2, To mitigate this risk, a multitude of coincidence has to align from rising inflation, YCC, correlations, cross market vol, liquidity - better cross that river when we get there. 3, A couple of years ago there was a gentleman on RV who was talking about the general sequence of a PM bull market with how benefit from metals are shifting to miners then eventually to silver and juniors near the top. To me looks like silver juniors where it's at - I have a basket that even when silver was getting pounded, it barely moved down (and sometimes up) at all. They're really seem to be acting like options with no decay at this point. 4, AG just announced they will start paying dividends from January. More of this is to be expected at these levels - confirms your idea. 5, "The rush to Bitcoin is destroying gold" is in my opinion yet another marketing slogan with little evidence.
  • JY
    John Y.
    8 December 2020 @ 02:45
    What a great interview. Masterclass.
  • KZ
    K Z.
    8 December 2020 @ 00:50
    Excellent Insights!
  • AP
    Antonio P.
    7 December 2020 @ 13:33
    So let me understand, earnings will soar from 2Q21 because the easy comparisons. So when earnings tank, stocks go up big way in antecipation of better times ahead and when they actually "soar" stocks algo go up. What a wonderful world!
    • RM
      Robert M.
      8 December 2020 @ 00:49
      And a number of companies like LOW and HD will have negative comparisons in 2021 as demand was pulled forward.
  • mf
    massimo f.
    7 December 2020 @ 21:07
    I question this base assumption that corporate earnings have been crushed by Covid, according to the Fred database Q3 2020 recorded record corporate profits before taxes. Corporate profits 'rebounding' implies that they will continue to sky rocket not making up old ground.
    • RM
      Robert M.
      8 December 2020 @ 00:46
      I wonder about this as well. Really depends on the industry. Seen a couple of people predict a huge global growth in GDP. My question is whether we just see a rotation in growth from stay at home companies to firms in the travel/food/entertainment biz. Those companies will see a huge surge in demand as people start traveling, eating out, going to concerts, etc. But there are limited dollars and it would seem that you will see money pulled from home improvement, appliances, automotive, furniture, outdoor equipment, grocery stores, PCs and other categories that benefited from the shutdown. Otherwise, with the massive ramping in debt, a number of companies going bankrupt, and high unemployment, where does all this new spending come from? Would love to hear other thoughts.
  • AS
    Alexander S.
    7 December 2020 @ 20:44
    Thx RV and Ed Harrison for another fabulous interview! Richard is excellent in explain complex matters in a simple, pragmatic way.
  • JA
    John A.
    7 December 2020 @ 19:36
    Another guy who is excited about M2 money growth.
  • RC
    Richard C.
    7 December 2020 @ 17:52
    I'm not quite sure I agree with Bernstein's views on China's stocks, it sure seems to me that if you're playing cyclical and value, then it's actually the SOEs that you should go into right now, most of them have pretty high yield base (albeit sometimes irratic.) and most of them are also around the lower range of their price in any sort of meaningful time frame range you want to look at. Meanwhile Alibaba etc is in many ways in the same boat as the FAANG stocks, So I would be looking into the various SOE energy stocks (pretty much all energy stocks are SOE anyway in China.) Sinopec or China petro or CGN power ( a SOE that runs the nuclear powerplants in southern China. though this may fall a bit more in the utilities range.) or even some of China's banks if you agree with his argument that USD will fall, and Chinese bonds will incrementally draw in more money. If you're doing cyclical trades, there's literally nothing about China's big flying private names that fits the bill, most are at all time highs. and while they do make good money, they're not exactly dishing out yields and obviously they face much bigger regulation risk than the SOEs.
  • DS
    David S.
    7 December 2020 @ 16:59
    Mr. Green has been proven correct so far. It is passive flows of money coming into the market. If passive money starts to flow out of the market, stocks will go down. I wish there were more to it, but I do not see it. DLS
  • Nv
    Nick v.
    7 December 2020 @ 11:36