The question keeps coming up.
As it should.
“JC, do you think this bounce in Growth has legs?”
And the answer is that yes, I think it could. There are some nice trades in these beat up growth areas that have set up very nicely.
We discussed a few of these once again on Monday night.
But I believe this one really depends on your time horizon.
Can Growth outperform for a bit? Sure.
But do I think it can do that throughout the rest of the year?
No I don’t.
Here’s the Large-cap Growth vs Value in black, as well as the Small-cap Growth vs Value in Blue:
The Small-caps had it right all along, as you can see here.
So we should probably listen.
For me it’s an interest rates story. If rates are rising, Value stocks tend to outperform Growth.
Do you think the US 10yr Yield heads towards 3%?
I still do.
So what does that mean for this ratio?
I think we keep buying the leaders in Materials, Industrials, Energy and Financials.
That’s been working.
I think it keeps working.
Are there some hero trades in growth? Definitely. We discussed one we really like yesterday. Give this one a watch.
So what’s your time horizon?
What are your objectives?
I think answering these will go a long way in helping you answer whether you want more exposure to growth or value.