Bull markets don't treat all stock equally, of course, and it's instructive once in a while to take a look at which stocks are reacting to different environments. Our recent bull run is now mature enough to have two different phases: There was the stunning growth from last March through October or so, followed by more of a plateauing we've seen since then.
Those different periods were kinder to different kinds of stocks. Last year, the S&P growth index - featuring highflying stocks of companies that are expected to show strong growth - rose 29 percent, while the S&P value index - featuring stocks of companies that were considered beaten-down or undervalued - rose just 17 percent. But in a quieter environment, the situation has been reversed. Since the beginning of this year, value stocks have risen 7.4 percent, while growth stocks are up just 4 percent.
That's been the pattern for a long time. Growth stocks tend to do better when the market is roaring, and value stocks do better when things have cooled off, or in bear markets. Growth stocks, for instance, did better in the pre-crash year of 1987, and in the dot-com explosion of 1995-1999, but in most years, value stocks take the prize.
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