The time for stock pickers

LAST UPDATED JUNE 2021

As a decade of growth-led momentum gives way to a choppy value resurgence, the outlook for markets is uncertain. Stock pickers are poised for their moment in the sun…

While it has been widely discussed, it bears repeating: 2020 was a truly tumultuous year for global equity investors.

In the latter quarter of the year, the growth-led momentum trade that had driven markets for the previous decade came shuddering to a halt. Stocks that had sat on historically high price-to-earnings ratios widely fell out of favour, with many global markets rotating into ‘value’ stocks instead.

This was problematic for many investors, with the majority having tilted their portfolios towards growth focused managers and funds in the preceding years. However, as the market has relatively indiscriminately turned to those stocks sitting on more depressed
valuations, some observers are suggesting that this trade may too be nearing maturity.

All of this makes it challenging to work out where exactly to put your money. With styles coming in and out of favour, are you better off tilting towards value or growth? Rather than looking to these two ‘styles’ of investing, it may be worth considering the old-fashioned approach: true stock picking.