Wednesday, January 26, 2011
My boss at West Coast Asset Management was on CNBC again last week discussing some of our recent research on two of WCAM's positions, Clorox (CLX) and Kimberly-Clark (KMB). While I am certainly not bullish on the S&P 500 as whole (given that it is trading at a Shiller P/E ratio around 23x), it is remarkable how much consumer staples have been left behind in this rally. Everything that is cyclical and small has gone straight up since the announcement of QE2 and everything that is safe and stable has lagged by a large margin. These are tough times for value investors but if you believe in reversion to the mean it is unlikely that the current return disparity will last much longer.