During his recent webcast, Ken Fisher explained how to position your portfolio for a rebound. Here’s an excerpt from the webcast:
Fisher: But the fact of the matter is all this year the data points reinforce a simple notion, said very simply that if the market was going up Tech would be doing better than the market. If the market was going down Tech would be doing worse, but you could extrapolate that much more broadly.
The extrapolation that’s more broad and still fully valid is when the market’s going up growth stocks are leading, when the market’s going down, growth stocks are lagging.
The inverse is, when the market’s going down, value stocks, defined as cheap relative to earnings or book value or dividends or some other valuation criteria EBITDA or whatever, value companies do better when the market’s going down. They’re doing worse when the market goes up. Now here’s the point that I want you to see.
When you have either a standard correction or the back-end of a bear market either one the categories that lag the most on the downside, not a hundred percent but close to, bounce the most in the first few months when you get to the rebound.
So right now if you listen to media, if you read so many sources they’ll tell you this is the time for value.
Well that’s true if you believe the market’s going to keep going down. If you believe the market’s going to go up this is exactly the time not to do value but instead to do growth because the categories that get pummelled the most on the downside, as categories again not every single stock, I’m talking categories here, do the best on the upside.
You can watch the entire discussion here:
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