Is There Value in Value Stocks?

Posted On May 26, 2020 2:49 pm
By: Steve Smith

With stock indices raging back to levels prior to the pre-COVID 19 levels many people are wondering if this is a time to look at value stocks. It has been well documented that growth has outpaced value for over a decade with technology leading the way. The tech-heavy is “Nasdaq 100 (QQQ)” is only 3.5% away from the all-time high hit February while the broader “S&P 500 (SPY)” is still some 10% away. Meanwhile the “Russell 2000 (IWM)” is the main reason for the disparity is the QQQ is heavily weighted with large-cap tech/growth stocks while the IWM is saddled with value stocks that come from sectors such as energy and regional banks.

When we drill down and compare the “Russell 2000 Value (IWN) to the QQQ you see the separation began in earnest last year and then went into overdrive when the virus hit. Again, the explanation is simple; the QQQ is filled with stay-at-home plays such as “Amazon (AMZN) and “Netflix (NFLX)” while the IWN has a ton of energy like “Chesapeake (CHK).”

So, the question is, is value a… Continue reading at StockNews.com

Tagged with: stock market

About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.