Value stocks' rise is just starting, Morgan Stanley says

  • U.S. value stocks surpassing growth stocks marks the beginning of a longer-term trend, Morgan Stanley chief U.S. equity strategist Michael Wilson writes in a report.
  • The move favors an overweight position in financials, consumer staples, and utilities, he said.
  • S&P 500 Value Index returned ~5% since the start of August vs. +0.9% for the S&P 500 Growth Index.
  • “The long-overdue adjustment process for the most expensive secular growth stocks is under way and will likely continue until valuations become so cheap that they discount a more achievable outcome on growth and profitability and/or the risk of economic recession and lower capex subsides. I don’t think we’re there yet on either score," according to the report.
  • ETFs: IVE, VOOV, IJS, RPV, SPYV, CLM, FUND, BFOR, VLUE,QVAL, PWC, FVAL

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