Growth Stocks Gyrating Earnings

Growth versus Value Stocks

History has shown that investors, at any given time, have a clear preference for either growth or value stocks. It's not that both can't perform in an up market. However, there is typically a very distinct bias to which is doing better on a relative basis. This was particularly obvious over the past decade, when the technology bubble of the late 90s was followed by a strong swing towards stocks that offered cash flow and stability. From 2000 onwards, global investors' inclination for above average dividend yields, low P/Es and strong balance sheets resulted in an impressive partiality to value over growth. Further, with the FED lowering interest rates to forty year lows, many of these debt laden value stocks found their balance sheets improving without their business prospects showing any dramatic improvement.