Monday, April 28, 2014

Value Overtakes Growth

For the past five years or so, growth stocks have strongly outpaced value stocks in the market, but that appears to be starting to turn around. The Russell 1000 Value Index of large-cap stocks is up 3.6 percent on the year, while the Russell 1000 Growth Index is up just 1.1 percent.

Growth stocks, remember, are those that investors expect to build equity by showing strong sales and market-share growth. Value stocks are those that investors think are currently undervalued by the market, and expect their share price to increase over the long haul.

Recent years were very kind to high-flyers like Amazon and Apple that are considered growth stocks. The current environment, though, may be more beneficial for safer, more defensive stocks, like those in the utilities and health care sectors - classic growth picks.

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