“This series examines the risks of maintaining large cap growth exposure (sticking with the current winner) versus large cap value shares (being a contrarian and a long-term investor, like Warren Buffett) in the environment of Fed tapering,” Marc Wiersum writes for Market Realist. “Large cap value shares have outperformed large cap growth shares since 1998. That is the typical, long-term norm. However, growth shares were exceptionally strong relative to value shares coming out of the 2008 crisis, and on a post-2008 basis, maintain a small lead over value shares.”
“With the Fed tapering its bond purchases, and a potential end to the Fed’s buying program by the end of the year, rates could increase, and this could have a significant impact on the equity markets,” Wiersum writes. “For investors who see a virtuous cycle of employment, consumption and investment in the works, the continued out performance of growth stocks over value stocks could remain the prevailing trend, favoring iShares Russell 1000 Growth Index (IWF), and growth oriented companies such as Google, GOOG, or Apple, AAPL.”
Read more in the full article here.