Value Stocks Maintain Leadership Position
Chart of the Week for February 16-22, 2001
The year 2000 took investors on a rollercoaster ride characterized by sharp upsurges and downturns. Not all sectors suffered, however. Losers were clustered mostly in technology, communications services and equipment manufacturing. Value-oriented sectors like health care, financials, and utilities had good returns. Accordingly, value indexes outperformed growth indexes across all market capitalization. So far this year, the scenario
Looking at the chart above, the value style of investing has dominated the growth style across all market segments. The S&P/BARRA Value is in positive territory with a 2.1% rise, while its growth counterpart, the S&P/BARRA Growth, has fallen (1.2)%. The contrast is even starker for smallcap stocks, where the value subset of the S&P SmallCap 600 Index has risen 10.6% versus only 0.5% for the growth subset.
Taking the long-term view, the market performance in the last five years has reminded investors that regular changes of leadership makes it practically impossible to earn returns by chasing short-term trends. Gains made in the short run can be preserved only if an appropriate level of diversification across market sectors and segments is maintained. Risk exposures should be justified by time horizon and ability to withstand losses.
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