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2020.11.01 Penn Wealth Report Vol 8 Issue 04

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Penn Wealth Publishing Subscription Information https://www.pennwealthreport.com Penn Wealth Publishing 9393 West 110th Street 51 Corporate Woods Suite 500 Overland Park, KS 66210 4 penn wealth Report volume 8 issue 04 01 nov 2020 Penn Wealth Report Copyright 2020. All Rights Reserved. From the Editor/ I vividly recall the period. Perhaps it was the fact that I was a young broker with the daunting dual mandate of accumulating new assets while effectively managing those I already controlled. More than likely, however, it was simply the frenetic nature of the stock market at the time that made such an impact. In less than the span of a decade, between the mid- to late- '90s and the early years of the new millennium, we went from glowing promises of an enduring and paradigm-shifting "New Economy" to a market crash and a massive reshuffling of the winners and losers. Suddenly, the vaunted growth stocks were dogs and the hated and impugned value stocks were on top—at least relatively. Take a look at the chart below. It represents the total return over the past decade of growth stocks versus the S&P 500 ver- sus value stocks. e disparity is stunning. Growth stocks rose nearly 400% while their value counterparts were up just 155%. Examples of companies in the growth category include such names as Netflix (NFLX), Salesforce (CRM), and Fastly (FSLY). In other words, companies with enormous P/E multiples and paltry to no dividend yields. e chart for the past ten years looks ominously similar to the growth versus value story of the 1990s. But take a look at the second chart, which quantifies the great reversal of fortunes that took place between 2000 and 2010. A 44% gain over the course of a decade (for value) may not seem that impressive, but it sure beats the 23% loss growth investors had to contend with. We love great growth stories, and aren't against investing in tech names which have yet to turn a profit, but the growth over value argument being espoused by many market analysts sure sounds a lot like the "New Economy" argument they tried to sell us two decades ago. Having managed money through that incredible market period, here's our advice to investors: You don't need to sell your beloved growth names; just begin sifting through the earnings-rich value names to balance your portfolio. —MSH Michael S. Hazell editor-in-chief Write off Value Stocks at Your Own Peril Investors are gobbling up growth stocks and shunning their value cousins; we've been here before.

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