For the last 13 years, growth stocks have outperformed value stocks by a comfortable margin. Prior to that period, value stocks had outperformed for decades. With the shift in the tide toward the end of 2020 (when value finally outperformed again) the question begins to loom: “What should you own for what lies ahead?”
The answer to that question is, “Yes.”
There is no shortage of people who are willing to die on the hill that value stocks will return to their long-term glory just as there are many who say this changing of the guard is permanent. Invariably, somebody will be right, but maybe for the wrong reasons and maybe not for very long.
My guess is that both investment choices will end up okay given a long enough time horizon. But that’s not a pleasing answer to many people. They want to know “the answer.” But of course, there isn’t one because there are no facts about the future. We can’t know the winner of a game until after the game is played.
Investing is a cyclical experience. Diversification means never (and always) having to say you’re sorry. You can never shoot the lights out, but you can never really get killed either. It’s one of the great things about such a simple concept.
Why must we feel compelled to make a choice and die on some metaphorical investing hill? Why not just diversify and say, “May the best investment win.”? Either way, you’re positioned to benefit from any and all possibilities. Isn’t that the outcome we’re all searching for?
Do yourself a favor. Don’t get caught up in the arguments one way or another. Maintain a diversified portfolio across all investment types and sit back and let others fight it out. It’s boring, but you’ll probably sleep better because of it.
Stay the course,
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This post is not advice. Please see additional disclaimers.