It’ll be interesting to see how this plays out. Personally, I think both charts are iffy at best as plenty of “growth stocks” like Apple, Microsoft, and others are widely owned by value investors (we’ve owned Apple for years). This means the basic inputs behind the data is suspect. I think it does hold some value as to the general sentiment of investors but little when measuring actual results.
“Davidson” submits:
The daily SP500 Value vs. Growth ETFs show that trends have changed. The FAANG-type issues in favor prior to COVID and heavily favored thereafter with the shutdown are stalling regarding investor preferences as industrial issues gain acceptance. The chart presents ETF prices and % change from 1yr ago on a daily basis. VOOG has stalled since Sept 1. VOOV began to rise sharply Nov 6th.
In my opinion, we are in early stages of the shift favoring what can be called the US core economy issues. That oil prices are rapidly approaching $45/BBL is a reflection of this shift in market psychology.
Up to this point from early 2018, Growth issues have been heavily favored as hundreds of recession forecasts flooded the media 2018-2019. No recession occurred but many sectors declined on these fears. COVID-19 caused market collapse and recession in April with investors convinced that only a select few FAANG issues were worth investment capital. Many positive 2Q20 and 3Q20 reports from core US businesses were ignored as COVID-19 issues remained the majority of media reporting. With FAANG issues stalling, Momentum Investors began to shift capital. Momentum is building in US core economy issues and it is now apparent in VOOV since Nov 6th.
This appears to be early stages of a significant shift in investor perceptions. Equity markets are likely to rise significantly the next few years.
