Earnings growth key to valuations

The first half of 1999 has seen what can only be described as the revenge of the value investor. Value stocks have outperformed the FTSE All-Share by on average 25%. So, after years of struggle why has this style done so well? A primary reason has been what we have termed the 'Lazarus effect'. Many value cyclical stocks were priced for dead at the end of last year by investors bruised by falling markets, the Russian default, hedge fund calamities and fears of global deflation. The US and other central banks moved quickly to return a measure of stability to world stock markets and as a cons...