With all the craziness of the speculative stocks right now (AMC, Telsa, etc.) you would think that Growth stocks in the US were going to continue the dominance they’ve shown for the last 10+ years. The 10-year S&P return for the last 10 years was 13.6% annually vs. 10.32% for the Russel 1000 value index (VRVIX).
However, there is “growing” (ha ha) evidence that value stocks are getting ready to make a comeback (similar to what they were after the dot.com bust). You’ve seen me write about value trading in the past, and Kiplinger’s just came out with an article arguing that 2021 might be the year of value stocks.
One of the key arguments of the Kiplinger’s article is that low interest rates have a negative effect on value stocks in comparison to growth stocks (who can use the low interest rates to borrow cheaply and grow faster).
My value stock index fund (VVIAX) has grown an average of 13.54% annually over the last 5 years vs. my S&P Index has growth an average of 17.13% annually over the last 5 years. However, for year-to-datte, it has reversed: Value 18.18% vs S&P 13.84% – even as certain speculative stocks have skyrocketed.
I’d like to think that undervalued stocks (energy, utilities, etc.) are going to do better in the next decade. I’ll continue to put them as part of my portfolio, and I hope you’ll consider them as well.
Mr. 39 Months