Why doesn’t this sound right? I would think it to be the other way around… Growth stocks are more likely to outperform during a recession as there are few other firms with growth and a premium would be priced into growth stock valuation. During an expansion, many firms are doing well and the valuation premiums for growth stocks may decline.
Growth stocks are also less volatile… Put that in your pipe and smoke it
lol… Yes Doctor it is correct.
I am just remembering, when in Doubt according to CFAI Growth stocks are better.
It is true. During a slowdown/recession Growth stocks tend to be favored over Value stocks b/c Growth becomes a premium during Recession so its bid up and prices of the Growth stocks increase and VAlue stocks decrease. Take a look at the Growth vs Value stocks over maybe October to March, you should see Growth outperforming Value stocks, at least I recall they were :). My brain is mush right now.
Mr.Good.Guy Wrote: ------------------------------------------------------- > I am just remembering, when in Doubt according to > CFAI Growth stocks are better. Yeah that threw me for a loop when doing one of the practice exams…WTF huh
luckily it’s one of those things that CFAI has so backwards i wont forget it.
sad but true beantown!
bigwilly Wrote: ------------------------------------------------------- > It is true. During a slowdown/recession Growth > stocks tend to be favored over Value stocks b/c > Growth becomes a premium during Recession so its > bid up and prices of the Growth stocks increase > and VAlue stocks decrease. Take a look at the > Growth vs Value stocks over maybe October to > March, you should see Growth outperforming Value > stocks, at least I recall they were :). My brain > is mush right now. well it’s not really fair to use that time period since most value stocks are financials…but yea, First Solar less volatile than JPM? good job CFAI
From the ivory towers it is!!! Us peons are not worthy!
when you say growth stocks are less volatile: wouldn’t you instead say that earnings of Value stocks are more volatile? Not necessarily that growth stocks are less volatile?
In reality, it is a question subject to debate. It is not necessarily true that growth stocks are less volatile. Look at the volatility of those solar stocks in the US. In a recessoion, the earnings of financials may be more stable than growth stocks which have higher earnings risk, and financials tend to outperform during recessions. Look at how the financial stocks move versus those cyclical stocks (materials, industrials, etc), and you know what I mean.