Value stocks are often the first to recover after recessions and bear markets end. They performed well in the 2002-2005 period and in 2009 immediately after the Great Recession.

Early last autumn there was a brief period when it looked like the leadership of pricey growth, which dominated the 2009-2020 bull market, might be coming to an end and the baton was being passed to value stocks.

Lately, new doubts about value are resurfacing. To be bullish on value, one essentially has to be optimistic about financial stocks and commodities, including oil and materials.

Big banks have fortress balance sheets and are entering this recession in a position of economic strength, but the same can’t be said of energy and materials. Russia and Saudi Arabia are feuding and can only agree on one goal—their desire to put the American fracking industry out of existence. They seem to be executing that strategy quite efficiently.

Other commodity producers also are suffering. Dairy producers are dumping thousands of gallons of milk they can’t sell. Beef producers are seeing huge downturns in demand as restaurants are shut. Corn farmers are likely to have similar problems as the demand for ethanol tanks.

America will restart the economy next month but the reboot is likely to come slowly and be phased in stage by stage. Another industry that shows up in many value lists sadly is retailers. Thousands of department stores are expected to disappear.

Some market strategists believe that strong economic growth of 3% or more is a necessary requisite for a sustained value rally. Unfortunately, not everyone is optimistic that there will be a strong recovery once the pandemic is over. The notion that the Federal Reserve can just wave its magic money wand and business activity returns to normal isn’t realistic, according to this line of thought.

Put another way, just because the government mandated a near-depression doesn’t necessarily mean it will engineer a robust recovery. The only proximate precedent came in 1981 when Fed chairman Paul Volcker intentionally caused a nasty recession to break the back of inflation. While there was a strong rebound in 1983, many of the circumstances in that era were very different from today’s world.

One contrarian skeptic is Rupal Bhansali, chief investment officer of international equities at Ariel Investments and author of Non-Consensus Investing. In her view, the virtuous cycle reinforced by the longest economic expansion in American history is about to turn vicious. She would not be surprised if the S&P 500 fell 40% from its high on Good Friday.

Forty percent of Americans live paycheck to paycheck, Bhansali notes, and many of these folks were among the first to get laid off. Others have pointed out that it is unrealistic to expect millions of small businesses, such as small retailers, restaurants and bars, to all get back on their feet.

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