Hi. This is Matt Brundage at Bridgehouse. I recently had an opportunity to speak with Sionna's founder and Co CIO, Kim Shannon, about performance cycles during inflationary periods. Specifically how value performs in inflationary environments. Here are Kim's thoughts on that topic. You know, I think the interesting thing to keep in mind in terms of an inflationary environment is that some things do quite well.
And in Canada, tends to outperform the US in an inflationary environments because we have more commodity exposure and commodities tend to do well in inflation. And then the other aspect that, we as value managers find very attractive is this is research from Professor George Athanassakos of the Ben Graham Center for Value Investing.
He looked at the famous family and French data series of a century data, And and postulated, how does value do relative to growth in, when inflation is north of two and a half percent. We know today we got an announcement. Canadian inflation is three point one still. And, he's highlighting here that on that on average, value outperforms growth by eleven percent annualized.
And we're seeing this half opening across the world over the last three years, we have data showing that in almost every major market, including Canada, value has significantly outperformed growth from September twenty twenty on. So this changes in place and is benefiting, investors. And so so a good place to hide in a recession is to be in a cheaper market, like, and I'm gonna argue that it's Canada.
And I know my colleagues evens gonna point out that the there's numerous other non US economies that, are quite inexpensive and should do well in any recession and weakened economy that we may well face, going forward in the future. And then, you know, the big question is how long will all this value recovery last? And what I want to highlight is the last time we've gone from disinflation to inflation is nineteen forty one.
It was the started by a shock It was the beginning of the Second World War inflation the next year was nine and a half percent. Our shock was COVID. A lot of government largess, very much like the spending in a wartime period, created an inflationary spiral. And back in nineteen forty one to nineteen fifty one, that first ten years, value outperform growth by thirteen percent annualized, very close to the the guesswork, the research that Professor George Athanassakos has come up
to. So these cycles, interest rate cycles historically are on average about twenty years. We had this extraordinary forty year cycle up. It was matched with a thirty nine and a half year cycle down. And we we're gonna only guess if the next year cycle is up. So we've had three years of inflation now. We think we might have upwards fifteen to seventeen more years of net inflation. And that should benefit, value in Canadian investors.