In this week’s edition of The Bull & The Bear podcast, I settle the score and answer the question: Should you buy growth stocks or value stocks right now?
Since November, value stocks have had a great run.
Why wouldn’t they?
Value stocks have low price-to ratios but solid fundamentals, making them ripe for the picking when investors see such enormous stimulus spending that inflation seems imminent.
Investors favor value over growth and cyclical over defensive stocks because they’re betting on a return of inflation. Investing circles call this a reflation trade.
There’s been a big narrative this year about how interest rates affect the growth/value relationship, and I found a trend related to value and growth stocks that’s important for you to know.
In this episode of The Bull & The Bear, I look at this trend and give you a way to invest to profit from this ongoing boom.
Value Stocks Beat Growth … Until Now
When interest rates go up, future cash flows from growth companies are worth less. It also means the present value of cash flows that value companies earn today are worth more.
Since the first of the year, value stocks have pummeled growth stocks.
Growth Stocks Outperform Value Stocks Since Interest Rate High
Pro tip: Chief investment strategist Adam O’Dell is known as one of the best stock-pickers and investment analysts in the world. He’s spotted three market catalysts that could send the market to brand new heights … catalysts that will help “mint more new millionaires in the next 12 months than in the last 15 years.” To find out more about these events, and learn about Adam’s No. 1 “market breaker” stock of 2021, click here for the details in Adam’s Millionaire Market Summit.
The Bull & The Bear
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Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.