Is Growth Conceding?

December 02, 2020 | Jessica Noviskis, CFA, Associate Director of Alternatives

The market’s continued rally following the U.S. election has been a welcome relief, even more so for value investors. Since major media outlets called the presidential race for now President-elect Biden on November 7th, the Russell 1000 Value Index has outperformed the Russell 1000 Growth Index by 6.6%, and at one point by more than 10%. It has been the strongest value run since the dot-com bubble burst in 2001. The Monday following the result, November 9th, was the best single day for value over growth ever.

Presidential elections and other regime changes can often spark a rotation within the market. In this case, in addition to expectations for additional stimulus post the election, the delayed election results lined up with Pfizer’s announcement — and the peer announcements that followed — that its COVID-19 vaccine candidate was found to be more than 90% effective. Stocks generally, but in particular, more cyclical businesses and industries most impacted by the pandemic, rallied and have continued to gain momentum. Banks are up 20% and Energy stocks more than 30%. Technology and Healthcare have lagged despite the Republican gains in Congress that subsequently reduced the risk of sweeping regulatory changes.

The question now is whether value can maintain this momentum. Interestingly, the move is reminiscent of the period following the 2016 election. From the election on November 8th, 2016 to a peak in mid-December, value had outpaced growth by 5%. Financials, along with Energy and Basic Materials, led at that point as well, though for different reasons, set to benefit from expected regulatory rollbacks, tax cuts, and protectionist trade policies. Technology unsurprisingly lagged following Trump’s attacks on Tech bellwethers throughout his campaign. But the high expectations fizzled as Trump’s agenda hit roadblocks. In 2016, value’s advantage lasted roughly a month, with growth back on top by mid-March 2017. Only time will tell how market dynamics will play out this time. Relative to growth, value is trading at some of the most attractive valuations ever. But several of the same trends that led to growth’s dominance over the last decade, and certainly this year, are also arguably stronger than ever.

Print PDF > Is Growth Conceding?

 

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Jessica Noviskis, CFA
Associate Director of Alternatives

Get to Know Jessica

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Related Content

05.14.2024

The “Fix” Is In!

The strength of the U.S. economy over the last several quarters has surprised many investors, as consensus expectations from the…

05.09.2024

The Emergence of Argentinian Equities

Argentina has faced myriad economic headwinds in recent time, including hyperinflation, currency-related difficulties, and a series of defaults on its…

05.02.2024

Is Bitcoin Fairly Valued?

Despite mixed performance to start 2024, bitcoin finished the first quarter up roughly 68%. Buoyed by a broad weakening of…

04.26.2024

1Q 2024 Market Insights Video

This video is a recording of a live webinar held April 25 by Marquette’s research team analyzing the…

04.25.2024

Mind the Gap

Any ride on the London Tube reminds riders to mind the gap: Beware the space between train car and platform…

04.24.2024

Japan: This Year’s Vacation Recommendation

Foreign investment isn’t the only thing streaming into Japan. In 2023, the number of travelers to the country surpassed long-term…

More articles

Subscribe to Research Email Alerts

Research Email Alert Subscription

Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.

We respect your privacy. We will never share or sell your information.

Thank You

We appreciate your interest in Marquette Associates.

If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.

Contact Us >