In recent history growth stocks have been the main choice in the stock market, especially in the early stages of a bull market. Is this changing now? Will value stocks begin to lead the market into the future? If you are uncertain what a value stock is, they tend to pay large dividends, trade at low valuations while having strong balance sheets. During the last few years of stock market trouble, growth stocks were supposed to lose their leadership role and value stocks were supposed to take over. This has not come to fruition we wonder why and what the future holds.
If history has any say value stocks should pick up steam as the presidential elections draw near. As we all know, historically the market moves in a certain manor not only during presidential elections but during a presidents time in office. Does this actually mean anything, why do we have certain trends?
The presidential election brings a time of uncertainty for the market that is completely natural. Companies don’t know what to expect from a new president and tend to become cautious, the same goes for traders. The stock market historically has favored value stocks during the 4th year of a president’s tenure due to this uncertainty.
We are not predicting whether the market will go up or down, just that value stocks tend to do the best during these times. While you are tweaking your portfolio, its a good time to ensure you have a solid percentage of value stocks in your portfolio from now until after the dust has settled from the presidential election.
