Many readers here are likely very aware of the style shock across most asset classes that developed in mid September as bond yields bounced higher, triggering a teeth rattling reversion between growth and value stocks and between low volatility versus high beta themes. A majority of investors and strategists see this as temporary, while the minority, including myself, view the reversion as potentially the first shot across the bow of reversal that could extend into and through Q4.
For now the majority apparently are correct given that the trend of value vs growth remains down. However, as I’ve discussed here repeatedly, I encourage investors to add more cyclicality to portfolios given the top down cycle work I’ve published along with the bottom up improvement evident in semis, industrials and truckers to name just a few examples.
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