Our U.S. stock market is making a shift to value or business cycle sensitive stocks from growth stocks that are not sensitive to this cycle. This has not been one major shift, but a process of going back and forth as investors look for evidence of a pick-up in business activity that supports the value case. Unfortunately, this evidence has not been overwhelming, but one of vacillating information.
Riverplace Capital believes that this shift will indeed occur, but may take some time to be fully recognized.
This shift is taking place at record levels for the major stock averages. The growth sector is so fully priced that a lot more upside in the stock market averages is unlikely. A shift toward lagging sectors is what’s needed in order to drive incremental returns. This is happening, just not in a continuous fashion. We need to be patient; stay steady my friends.
The Lonely Bull