The fundamental story we have been talking about for a couple of months is the rotation from growth to value. It is not just the biggest tech companies anymore. We have seen more selling the news in the tech sector as we work through earnings season. This supports our earlier articles laying out the strategy of repositioning into the value and alternative space. We ﬁnally see a reversal after almost thirteen years of growth outperforming value. This trend is likely here to stay. What could cause this outperformance after all these years? The backdrop for the growth story of low-interest rates and low inflation is changing. Even the money managers who believe that inﬂation will be transitory are starting to ring the value bell. The high-ﬂying names of 2020 were in the perfect spot at the perfect time during a perfect storm. The exuberance is coming out of the high valuation stocks, and we think this is a good thing. That’s not to say that growth is completely over. But we believe that continued rising asset prices could eventually cause a bubble and trigger continued rotation for a more risk-off appetite. As a tactical money manager trying to navigate and invest in the last year’s market was not only frustrating but out of my comfort zone. It is refreshing to look at the fundamentals once again and return to some rationale when risk managing a portfolio.
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