fbpx

2017 Will Be a Banner Year For Growth Stocks

2016 was a good year for the stock market, but the growth in the market was primarily confined to value stocks. Growth stocks didn’t have a good year — for the third year in a row.

The reasons why value stocks, also known as Blue Chips, have been beating growth stocks is two fold.

  1. First, investors had two stock market crashed within a span of a decade, and are gun shy of anything beyond safe stocks.
  2. Second, with interest rates low, investors who sought out income invested in value stocks, many of which pay nice dividends.

The flood of money from value to growth was so pronounced that many of the best growth stock money managers, such as Ron Baron, are saddled with three-year returns of around 0%.

This has caused investors to capitulate, and sell growth funds to buy value funds because…well… the past returns are better.

But now the tide is turning, and I expect the shift of money to come back to growth, with 2017 being a banner year for growth stocks.

Not a member? Sign up here for $25 a month.