Events | June 06, 2023

Value Is More Resilient in a Recession Than You Think

Stop looking for excuses not to buy it


GMO’s Asset Allocation team is dialing deep into Value and holds high conviction that the cheapest cohort of Value stocks is priced to outperform the market, and the most expensive Growth stocks, in particular. In this webcast, Asset Allocation team co-heads Ben Inker and John Thorndike discuss how Value is positioned in the current macro environment and share recent research on how Value may fare if we enter a recession. The team also examines how to best capitalize on the incredible cheapness of Deep Value in portfolios.

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Key Points

  • Deep Value is extremely cheap across global equities and is truly dislocated in the U.S.
  • A core concern for investors taking advantage of the incredible cheapness of Deep Value stocks today is the potential for a near-term recession, but empirical evidence shows that Value stocks actually tend to outperform in recessions.
  • Value stocks have the charm of low expectations. No one expects much from them, so they have less to lose in an economic environment in which companies of all stripes wind up having a difficult time.
  • Based on current valuations, Deep Value is priced to significantly outperform the rest of the market. Our analysis suggests that the prospect for deteriorating economic conditions in no way impairs this thesis.

Deep Value: Cheap With Strong Fundamentals

Value is More Resilient_6-6-2023_Exhibit.JPG
As of 5/24/2023 | Source: Vanguard, iShares, MSCI
*Historical 1-year weighted median
MSCI data may not be reproduced or used for any other purpose. MSCI provides no warranties, has not prepared or approved this report, and has no liability hereunder. Please visit to review the complete benchmark disclaimer notice. S&P does not guarantee the accuracy, adequacy, completeness or availability of any data or information and is not responsible for any errors or omissions from the use of such data or information. Reproduction of the data or information in any form is prohibited except with the prior written permission of S&P or its third-party licensors. Please visit to review the complete benchmark disclaimer notice.


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Disclaimer: The views expressed are through the period ending June 2023, and are subject to change at any time based on market and other conditions. This is not an offer or solicitation for the purchase or sale of any security and should not be construed as such. References to specific securities and issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities.
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