Style-Box Update 11/15/21 – Large-Cap Growth Reasserts Itself, But Value Working Too


This blog’s “Style-Box Update” done every 6 weeks is being posted this morning in the spreadsheet above, and it shows that while large-cap growth has reasserted itself since June 30th, 2021, the small-and mid-cap “value” asset classes are beating their growth brethren, probably thanks to the energy and financial sectors.

Here’s what is interesting: in the bottom-half of the style-box spreadsheet, I’ve started logging the 1,3, 5, etc. rolling returns for the various asset classes, and note the 15-year returns.

If anyone is interested in making the case that everything’s “stretched” or overvalued, or at minimum has run far too long in one direction, this table might be it.

“Value” hasn’t outperformed “Growth” on a wide scale since 2016, but is doing so this year.

The YTD sector return chart is from Bespoke this morning, and shows Consumer Discretionary leading sector returns this year through 11/15/21, not a surprise given Tesla is the largest market-cap weight in the sector. Per Bespoke, Tesla is still up 30% since 9/30/21 despite the recent drop.

Summary / conclusion: Having to prepare clients for the prospect of bear markets to come in the future, unlike the late 1990’s, it’s tough to find any reasonable value in the United States asset classes, which is not a surprise with a 1.6% 10-year Treasury yield in the US. One of the few asset classes with anything close to an appealing 10-year return is gold (GLD).

The length of this bull market can be calculated either from the bottom in March ’09 (12 – 13 years), or the point when the SP 500 made a new all-time-high in late April – early May ’13 (8 years old).

Split the difference and we have a 10-year old secular bull market when most secular bull markets last 15 – 20 years.

At some point the SP 500 will correct 15% – 20% (which won’t even erase 2021’s YTD 26% return) and then true investor sentiment can be gauged.

We could debate this stuff forever. Stay vigilant.

Take everything you read with substantial skepticism. Capital markets can change quickly.

Thanks for reading.


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