After these world-shaking events occur, the market usually sells off and then goes back to what it was doing before the disruption. If it was a bear market before the crisis, like during 9/11, stocks continue lower. If it's a rip-roaring bull market before the crisis, the market rips and roars. What's been happening lately, under everyone's radar, is value stocks have been outperforming after more than a decade of growth leading the way. Other than a short period in the summer of 2021, value has outperformed growth for a year and a half now, up 33% versus growth's 23%. Over the past three months, while value hasn't been immune to the difficult market, it is flat, whereas growth is down 13%. When the Going Gets Tough, the Tough Get Value Stocks The S&P 500 is down more than 14% from its high at the beginning of 2022. The Nasdaq, chock-full of growth stocks, has fared far worse, off 20% since its high in November 2021. Former high-flying growth stocks, like Peloton (Nasdaq: PTON), Teladoc Health (NYSE: TDOC) and Moderna (Nasdaq: MRNA), have gotten whupped like Sonny Liston facing Muhammad Ali. They're down 82%, 74% and 66%, respectively, from their highs. Meanwhile, value plays, like Mattel (Nasdaq: MAT), AbbVie (NYSE: ABBV) and British American Tobacco (NYSE: BTI), are higher year to date, while the S&P 500 is down around 10%. Value stocks were asserting themselves before war erupted in Ukraine. They will very likely continue to outperform going forward as well. Things are shifting in the markets. Make sure you're in the right stocks. The high-flying growth stocks of the past decade haven't been working for a while now. Value stocks are what will build your portfolio in the coming months and years. Good investing, Marc |
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