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Who’s Winning The Value-vs-Growth and Market Cap War?
Author: James Brumley (info)
Website: http://bluegrassportfolio.com
Posted: November 14th, 2006 at 6:06 pm EST
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Who’s winning the value-vs-growth war? No surprises that it’s value stocks over the long-haul, but growth seems to have the short-term edge. The table below says it all….the best 52-week returns were posted by the Russell 2000 (small-cap) Value Index, then the Russell 2000 Index (a combination of small-cap growth and value), then the Russell 1000 (large-cap) Value Index. In my observation, that scenario is the one usually seen, rewarding investors who don’t chase volatile growth stocks.
Of course, the exception to the rule is pretty clear in the short-run. The table below ranks returns from worst to best (top to bottom) for the style indices over the last 3 months. Small cap growth (via Russell 2000 Growth Index) appears to be leading the bullish charge, closely followed by other small cap stocks. Large cap stocks have clearly lagged during the more recent time frames.
The other implication, aside from the value/growth argument, is the market cap trend. Small cap stocks are on top for almost every time frame shown here. Again, in my opinion, I think it’s a tendency that will reward patient investors more often than not.
My personal outlook going forward? Of the six distinct categories here, I still like small-cap value the best. However, as we transition from 2006 to 2007, I think large-cap growth stocks may finally start to outpace the broad market. We shall see.
Style Box Performance Rankings
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Economics, Indexes, James Brumley, Politics, Sectors, Stock Market, Stocks
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One Response to “Who’s Winning The Value-vs-Growth and Market Cap War?”
November 21st, 2006 at 10:11 am
[…] Other possible asset classes can include among others, stocks and bonds in emerging markets, gold, commodities, currencies, penny stocks or options, but these are usually found in more sophisticated, esoteric and potentially more aggressive portfolios. Now even with setting aside these rather more challenging topics, there’s still more stuff to tackle with regards to deciding how to partition your money across the classes. For instance, with bonds, there are all sorts of bonds and bond funds to select. And with stocks, it’s easy to get confused about whether you should get into individual stocks, ETFs, mutual funds, or whether you should go for value versus growth, small versus large caps….. Ahhhh! It can all be quite much to take in one sitting. That’s something I’ll surely be tackling at another time. […]