Growth had its moment
- US large-cap growth returned nearly 400% from 2011-2020
- Value returned 171% during the same period
- Tech-led growth stocks dominated in the low-rate era
Then 2022 changed the game
- Rising rates hit high-growth stocks hard
- Russell 1000 Growth: -29%
- Russell 1000 Value: -7.5%
THERE’S NO PERMANENT WINNER
Market leadership shifts with:
- Interest rates
- Economic cycles
- Valuations
- Investor sentiment
WHAT SHOULD INVESTORS DO?
- Value: focus on valuation, cash flows and a margin of safety
- Growth: focus on earnings growth, market opportunity and competitive advantage
- Diversifying across
A low P/E doesn’t automatically mean cheap. A high P/E doesn’t always mean expensive. The real question is whether the valuation makes sense relative to the company’s growth and fundamentals.
To read the full blog, click: Value vs Growth Investing: Which approach Wins?