The Value Rotation Myth

Narrative vs. Reality

Despite the headwinds in the economy, the market as a whole has been doing well:

However, if we look at the subset of value stocks, it doesn’t look as good:

But, the subset of growth stocks looks really good:

Growth stocks have been outperforming consistently for a while now:

And, value stocks have been underperforming:

So, when the narrative around inflation is calling for some big rotation into value stocks and out of growth stocks, sorry but that just isn’t happening. In fact, the opposite has happened! Growth stocks have retained their strength and value stocks are at one of their deepest points of underperformance. That’s the case even with high inflation already here! If some rotation is going to happen due to inflation, we probably should’ve seen it already given that the market tends to be a leading metric.

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