Growth Outperforming Value Over Last Few Weeks

Hickey and Walters (Bespoke) submit: One noticeable aspect about the last couple of weeks of trading was that over an eight day period ending last week, the S&P 500 Growth index outperformed the S&P 500 Value index for eight consecutive trading days. Since 1990, this has been an infrequent occurrence with only four other occurrences of equal or longer streaks. The only other period where the S&P 500 Growth index outperformed the Value index for a longer period of time was in August 1994 when the period of outperformance lasted 11 days.

Below we show the performance of each index and the S&P 500 following the other periods when the S&P 500 Growth index outperformed the Value index for eight consecutive days. As the results show, on average the Growth index outperformed the Value index although the degree of consistency is nothing to write home about.

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Comments

[Amy Chiang]

Dear Hickey and Walters,

How should one choose whether to invest in growth stocks or value stocks? Are there any criteria to follow? Or does it differ according to the investor's risk tolerance?

Thanks.