This past Friday, the U.S. stock market did a sudden flip from an emphasis on growth to value. Value stocks prevailed after the election because it was forecasted that companies more tied to the business cycle would do best under the new President’s administration. They would benefit from more infrastructure spending, improved tax policies, and less regulation. After the new administration got bogged down with legislative failures and investigations into possible collusion with Russia, investors at the beginning of the year switched back to growth companies. These are not nearly so affected by a delay or even failure of the new President’s growth policies.

After the former FBI Director’s testimony on Thursday, investors made the assessment that nothing at this point was going to derail the new administration and just maybe its growth agenda might indeed be enacted.

At that point the long ignored value stocks looked cheap with better prospects and growth stocks looked to be expensive; so investors suddenly flipped from one to the other.

Since we thought for some time that the few growth stocks that were driving the stock market higher were too expensive, we remained with our bias toward value. This puts us in a good position to add to already good results.

Stay steady, my friends.

The Lonely Bull