Isn’t summer meant to be a quiet time for stock markets? Not this summer: instead, we have witnessed what Creative Planning strategist Charlie Bilello describes as “one of the most epic rotations in market history”.
Cheaper stocks soared even as the magnificent seven and growth stocks plunged.
Bilello notes growth stocks’ outperformance over value had recently widened to levels unseen since the peak of the dotcom bubble in March 2000. That set the scene for value stocks to finally outperform their growth counterparts by near-record levels.
Similarly, the small-cap Russell 2000 enjoyed its best month against the Nasdaq and S&P 500 since 2000 and 2001, respectively.
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Most agree July’s rotation was long overdue. The frenzy surrounding mega-cap tech stocks created an overcrowded trade, setting the stage for a violent reversal. However, that’s where the agreement ends.
Value investors think this is just the start. In contrast, growth-minded enthusiasts see July’s performance as a mere intermission before the Big Tech show resumes.
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