Vive la "Shift"!!! Growth to Value

[ScaredtoQuit]

2019 is turning out to be my best year ever! I attribute most of this to the shift in market preferences from growth stocks to value stocks which I have noticed taking place all year long. I am heavily invested in dividend stocks (which are mostly considered value) and individual bonds. My current allocation is 65 – 7 – 20 – 8 (equities, preferreds, bonds, and cash) and so far this year, I’ve had a return of 22.4%! This is helping to make up for returns over the last three years when I’ve lagged everyone else by wide margins. (During 2016, 2017, and 2018, I experienced returns of 14.10%, 5.54%, and a loss of 2.11%, respectively) Psychologically, the last few years have been tough because on more than one occasion, I’ve been tempted to throw in the towel and pursue growth like everyone else! If truth be told, I really needed this win so that I could stay true to my convictions.

For someone with a conservative mindset, “income investing” is a good alternative to the high profile growth mindset which seems to get all of the attention in the financial press. The yield of my portfolio is 4.24% which means I can easily draw off 4% each year without touching any of my principal. When we get to the inevitable down years, I expect my portfolio to decline less than comparable growth stocks because of the low betas inherent in my portfolio. Hopefully, that will leave me feeling warm and fuzzy!!

[RenoJay]

Congrats on a great catch up year! I’m with you...eventually value will come back with a vengeance, and til then, enjoy those juicy dividends!

[NW-Bound]

I have a mixture of stocks, and spend more time watching the growth stocks more than the value ones for the simple reason that the former are more volatile and selling options on them makes good income.

And I observe that defensive stocks such as utilities and consumer staples stocks have beaten the S&P YTD. Going back 2 years, they are all about equal.

This should not be surprising, given the widely known fact about investors been preparing for an economy slow down. They certainly have shifted to a more defensive posture.

What comes next is of course unknown. Have all the misgivings been baked into the price, such that the defensive stocks cannot go up more? Or do they have more to run?

Even if one is broadly diversified, for me it is more fun to own individual market segments instead of the whole market index. You get to see what goes into the sausage making. I always find it interesting how investors shift their money here and there. And if you could front run them a little to pick up a bit more, it's that much more fun.

[OldShooter]

Getting lucky is always lots of fun. Enjoy.

[NW-Bound]

There are a few posters here who are very conservative, and hold no stocks.

I am sure they are thinking those of us who have any stock at all, of whatever kind, have been lucky, and that comes the next recession or an economic disaster there will be people gnashing their teeth and crying their eyes out when their luck runs out. One cannot be certain that their prophecy will not realize. Nothing is sure in life, and it's all about chance and likelihood.

PS. By the way, today the growth stocks are beating the pant off the value stocks. I guess investors are betting that the trade war may end soon and lift a threat overhanging over the economy. I think they are too optimistic. Will watch to sell more out-of-the-money call options on my growth stocks.