Deja vu All Over Again
In the 1990's the Internet Bubble drove growth stocks higher, leaving value stocks out of favor. This pushed the relative total returns to an extreme 2 standard deviations from the average. This proved to be a turning point as value stocks outperformed growth for the next 10 years.
Value returns reached similar extremes versus growth prior to the Financial Crisis in 2008-2009. Growth stocks went on to outperform value since then and are approaching extremes last seen in the Internet Bubble.
Like Yogi Berra famously said, this may be "déjà vu all over again" as we could be close to another turning point. Synchronized global growth and a rebound in earnings could drive better confidence that favors value stocks.
The indexes used in the chart are unmanaged, and not available for direct investment; they include reinvestment of dividends; they do not reflect management fees or transaction costs: The Russell 1000 Value Index is a widely
recognized index of market activity based on the aggregate performance of common stocks from the Russell 1000 Index, with lower price-to-book ratios and lower forecasted growth values. The Russell 1000 Growth Index is a widely recognized index of market activity
based on the aggregate performance of common stocks from the Russell 1000 Index, with higher price-to-book ratios and higher forecasted growth values.
This publication has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product. Past performance does not provide any guarantee of future performance, and one should not rely on performance as an indication of future performance. Commentary may contain subjective judgements and assumptions subject to change without notice. There can be no assurance that developments will transpire as forecast. Information contained herein has been obtained from sources believed to be reliable but not guaranteed. No part of this publication may be reproduced in any form, or referred to in any other publication, without express written permission of Todd Asset Management LLC. © 2017