Wednesday, October 5, 2016

Growth and Value Relationship

Here is a chart depicting the relationship between growth(SGX) and value(SVX) stocks.  It's interesting to check out the relationship between these two sectors within equities.  The way this chart works is when the line is heading up that means growth stocks are performing better, and when the line is heading down, that signals value stocks are catching a bid.

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Note during the crash in '99 & '00 the vast out-performance by growth related stocks. Growth stocks generally have a big component from technology and high revenue growth companies.  Then for about 7-8 years investors sought the relatively safer waters of value stocks. Value stocks generally consist of lower growth companies trading at relative discounts to peers, and can pay dividends.

However what's striking is that despite the turmoil ensuing after the financial crisis, growth stocks have continued to garner more attention as years passed.  Even the recent surge back into blue chips and dividend payers the last year don't seem to be quelling the uptrend.

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