Tuesday, April 3rd, 2007
Long live growth
Matthew McPhee, Head of Global Fundamental Strategies at State Street Global Advisors, has written an article asking if growth investing is dead.
His colleague wrote a piece asking if value investing was dead just when growth stocks were peaking in 2000.
McPhee outlines a number of reasons why growth isn’t dead yet despite value outperforming for years:
1. The US economy is slowing, which is good for growth stocks:
“At a macro level, we observe a slowdown in US economic and corporate earnings growth. When growth slows, investors move towards companies that are less sensitive to economic trends or can provide attractive secular growth opportunities.”
2. Growth stocks are also cheap:
“Growth stocks have historically traded at a premium of 1.55 relative to value stocks and currently trade at 1.43.”
3. Traditional value sectors such as energy are overvalued:
“The strong rally in energy and commodities prices that helped drive the energy and materials sectors in 2006 appears to at least be leveling out.”
This entry was posted on Tuesday, April 3rd, 2007 at 10:28 am and is filed under Value Versus Growth. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
