Growth stocks have been trouncing value stocks for a long time now. The length and magnitude of growth’s outperformance has led to significant debate among investors as to whether we are in a new world where growth will dominate long-term, or whether mean reversion will occur and value will reassert its long-term dominance. Although readers of my articles already know I tend to lead toward the second camp, I don’t want to use this article to revisit that debate.
What I do want to do is talk about some of the most important things historical data shows and what I believe it takes to be a successful growth investor.
Let’s pretend we could turn back time to January 1st of this year. What if I gave you the following series of facts and asked you to predict the market’s return?
A pandemic came out of nowhere and led to extended periods where most of the country was required to stay home.
Economic activity fell dramatically and unemployment reached levels not seen since the Great Depression.
Businesses that require consumers to leave their houses like restaurants, and airlines and cruise lines were decimated with many losing most of their revenue.
If I gave you those facts in advance and asked you what you would have done with your portfolio for 2020, what would you have said?
In this bonus episode, we we discuss a presentation Justin recently gave to Fidelity customers about some of the major narratives shaping the current market. The word "unprecedented" tends to be overused in investing, but 2020 has certainly seen many occurrences that many investors have never seen before, and may not again. We talk about some of these things and what they mean for investors going forward.
We are currently in one of the most difficult economic environments many of us will see if our lifetimes. Even though the unemployment rate has fallen from its high of 15% to a level below 10%, it still exceeds the peak from the 2008 crisis, which itself was one of the deepest recessions ever. Small businesses and entire industries, like air travel, cruise lines and hotels are struggling mightily as the various degrees of lockdowns we have experienced in recent months have taken a huge toll. But despite all of that, the stock market currently sits at all time highs.
In this episode, we look at the reasons for this disconnect.
Validea is an incredible valuable tool to have. I depend on it for much of my research to help weed out stocks for my portfolio designs. The filters used for stock selection are easy to use and comes with a detailed analysis
as to the why each particular stock either passes or fails the test. The articles & blogs are a great wealth of knowledge too.
As a retail investor, I particularly value Validea’s top-notch research capability. With the deluge of investment commentary available via innumerable blogs, articles, FinTwits, white papers, podcasts, etc., the Validea team is one of my go-to sources to maintain some perspective
on what's really happening.
I am always checking my investment/trading ideas with Validea. I feel better knowing that any of the guru models they are following might also be on my side!
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