The US equity markets exhibit observable biases over time, alternately favoring one group of stocks over others: large cap vs. small cap; value vs. growth; defensive vs. dynamic; sector rotation, etc. We questioned whether there was a longer term benefit to favoring one group of stocks over the others.
Yields have fallen precipitously since 2018 on weaker economics, driving Momentum stock leadership, and the underperformance of Value and more-shorted names. These trends reversed in September on positive macro headlines and a pickup in yields.
It has been the best of times, it has been the worst of times…for growth and value…over the last decade. Since the end of the Great Financial Crisis (GFC), economic and market conditions have been generally favorable for US growth stocks.