This year has been the tale of two tapes. For those that have exposure to the growth sector, those assets are up significantly this year. For those with exposure to the value sector they are down this year. This will not be forever. Look at the chart below, The NDX, (tech/growth stocks) is up 30%. The Russell 1000 Growth (R1K-Growth) and Russell Small Growth (R2K-Growth) are up 22.1, and 6.3% respectively. While the Russell Large Value (R1K Value) and Russell Small Value (R2K Value) are down 14.5, 19.5 respectively.
As of the 10/29/20 close:
Growths stocks like Amazon, Google, Microsoft , etc…,, have been the place to be while the American workforce hibernated over the past several months. Large value stocks like Chase, AT&T, Chevron, CVS,……. have done horribly this year. But what will happen when a vaccine occurs, more stimulus is provided and people become more confident to go back out? We believe the traditional old economy stocks may advance significantly over the next few years for a couple of reasons:
- the valuations are somewhat depressed when compared to their growth/tech brethren
- People start to turn off the computers and go out , they will utilize more energy, restaurants, amusement parks , vacations, etc…..
The markets predict 6-12 months in advance. What should you do? First, make sure your allocation reflects your needs. (i.e 80% stocks / 20% bonds, etc.) Look for managers holding stocks that would perform better when the economy turns. This is all predicated on when a vaccine is available and the American public having the confidence to go back out. Granite wants to provide some direction on taking advantage of a return to normalcy. We are not saying it is happening now, but when it does, value stocks will do very well going forward. This is a suggestion of what we believe could happen, and it all depends on if it fits your risk appetite.
If you are retired or getting ready to retire or would just like investment assistance with respect to your account, please call us at 203-210-7184. We can be reached directly for one on one help.