There are things you just wouldn’t do when on a first date. Trying to use a discount voucher for a meal at a fancy restaurant is one of those things. Arguing with the waiter when it has expired is another. Accepting a ban for life when the manager offers to pay for the meal to get you out of the restaurant is a whole different level and would certainly put off anyone considering a partner for life.
Yet, here we are, and whereas that relationship seems to be thriving, the one between value and growth stocks has been an unmitigated disaster for quite some time. Since we started printing copious amounts of money to get us out of the Great Financial Crisis, the Vanguard Growth ETF has outperformed the Vanguard Value ETF by 132%.
However, at long last, there may very well be changes at hand. A lot of that has to do with Nvidia. To be clear, we are not calling an end to the run of the greatest stock in the history of mankind. But when you are up 967% in two years, trading at twenty times sales, beat earnings, yet still sell-off, and sit 15% below the June highs, you might want to look elsewhere for further excitement.
Enter the ugly cousin, and what’s not to like about Home Depot, Walmart, or Johnson & Johnson? There is even a bit of oil in there, just in case the inconceivable happens to dampen supply. Again, no one is saying the Magnificent Seven is done and dusted, but growth has finally underperformed value by a massive 1.65% since last week, and that’s before we argued for a further discount.
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