Growth versus Value

By Colin Twiggs
September 12, 2020

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The chart below plots relative strength of iShares Russell 1000 ETFs for Growth (IWF) against Value (IWD) since the year 2000.

Value dramatically outperformed Growth in the aftermath of the Dotcom bubble but Growth continued to underperform until 2008. Since the GFC, Growth has outperformed Value at an ever-increasing pace. The latest, almost vertical trendline is typical of a blow-off, normally followed by a sharp reversal as in 2000.

Russell 1000 Index ETFs: Growth (IWF) v. Value (IWD)

Conclusion

We expect Value to sharply outperform Growth in the next one to two years.

Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble... to give way to hope, fear and greed.

~ Benjamin Graham

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Colin Twiggs is director of The Patient Investor Pty Ltd, an Authorised Representative (no. 1256439) of MoneySherpa Pty Limited which holds Australian Financial Services Licence No. 451289.

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