| Author | Message | ||
     Entrepreneur Kurra Bewarse Username: Entrepreneur Post Number: 3873 Registered: 05-2011 Rating: N/A |
Growth stocks struggle in follow-the-leader selling Everybody didn't wake up today and say "it's time to sell my growth stocks because the 10-yr yield is pushing 1.70%," but somebody did and the move by that somebody confirmed that nagging feeling in others that they should probably do some selling of overvalued growth stocks, particularly the ones that aren't profitable, in what should be a rising interest rate environment in 2022. In brief, the weakness in the growth stocks today has a follow-the-leader mentality to it, which fits a market that has embraced thematic trades. The theme right now seems to be that these stocks could be destined to underperform in 2022 due to rising interest rates. There were some cracks in these same stocks yesterday while some of the mega-cap stocks were looking invincible, but the cracks have opened wider today with some selling of the mega-cap stocks and a knowingness that many of the smaller growth stocks ran to unjustified levels in 2021, and that, even with some experiencing sharp selloffs to end the year, they are still overvalued. Conversely, while growth stocks are struggling, value stocks are outperforming, which is what one would expect to see in an environment of rising interest rates that is predicated in part on above-average economic growth and a knowingness that value stocks have trailed growth stocks for a long time. The Russell 3000 Value Index is up 1.3% while the Russell 3000 Growth Index is down 0.7%. |