The stock market continues to be a battle between two competing outlooks. One forecasts a slow, challenging growth environment for the economy and the other an acceleration. Some investors even concede that there may be faster GDP growth on the horizon, but that it will not last or it will be offset by higher interest rates and inflation. Each forecast implies a different investment emphasis.
A slow or labored growth environment favors high growth companies. These should be able to do well regardless. Unfortunately, these are currently very highly valued. They have already been doing well for a long time.
A faster growing economy benefits companies that are more influenced by that growth. They may be called cyclicals and tend to fall into the value category rather than growth. These have been out of favor for years and are reasonably priced.
Riverplace Capital does not like to engage in all or nothing strategies so usually we have some balance with an emphasis one way or the other.
We are currently biased toward value and beneficiaries of better growth prospects. So far so good.
The Lonely Bull