value vs growth stocks & cyclical vs non-cyclical

[AlexMo]

I’m confused on why value stocks outperform growth during the aftermath of a recession (LOS 55k)….I would think that during the expansion phase growth stocks would outperform??
Wiley books state in LOS55L that rotating into growth stocks relative to value at the end of a recession is what you should do. So it appears to be a contradiction?
Lastly, Wiley states to shift from cyclical into non-cyclical prior to econ expansion? Again seems counter intuitive???

 

[data storm]

After recession:
- value stocks out perform the growth stocks, while growth stocks will outperform when the market is expanding.
- cyclical stocks out perform the non-cyclical stocks.
- Small stocks tend to underperform large stocks in bad economic times.
i don’t have a clear answer to your thoughts as i know that these have been historical market trends and what we learn is the output of these studies and empirical researches.

 

[rexthedog]

I am not 100% on this but I believe after a recession the turning point is quite steep back into a normal functioning economy. Therefore during this economic shift, value stocks capture more of the early stage momentum than growth stocks as they are relatively undervalued. As an economy booms post recession company gains are captured more from undervalued securities.

 

[MrSmart]

Big difference between aftermaths of a recession and the expansion phase of the cycle.
Value stocks are more cyclical too, so that should answer both questions.
There are some growth stocks that make a lot of money deep in a recession. They don’t really follow the herd.
Don’t confuse this with momentum. Focus on the actual fundamentals of the underlying stock.