CHICAGO, Feb 22 (Reuters) – In the mercurial world of stock
market trends, predicting whether the market is favoring growth
or value styles is an either/or situation.
Sometimes growth stocks, which tend to produce consistently
higher earnings, dominate. Then they fall out of favor, as value
stocks, bought at bargain prices relative to their potential
market value, take the limelight.
The nature of the beast in the growth vs. value tug of war
is that when big money managers conclude that growth stocks may
be getting overpriced then it is time to look for bargains.
Since institutions tend to move in a herd, a switch en masse
happens almost simultaneously and billions flow into
bargain-priced stocks over a period of months. Sometimes the
buying lasts for years.
Indeed, the value shift appears to have gained some ground
year-to-date through Feb. 15, as the value ledger of the S&P 500
rose 7.3 percent compared to 5.4 percent for growth stocks, S&P
“We do think that this is a trend that could have legs,”
says Todd Rosenbluth, director of Mutual Fund Research for S&P
Capital IQ, a market research company based in New York. “But
it’s still early in 2013.”