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reddingrunner (92.37)

Major Rotation Detected!



November 11, 2013 – Comments (0) | RELATED TICKERS: VIG , VBR , BRK-B

Prior to the first of this month, growth stocks were outperforming value, and small caps were outperforming large caps.  Since then, both of these trends have reversed.  You can check for yourself by comparing the performance of Vanguard Index Funds (MGK & MGV- Large cap growth and value funds respectively, VBK & VBR- Small cap growth and value funds).  

This is actually quite predictable, along the lines of my last blog post about the time this started.  Right now we are hearing a lot of calls for the bull market to continue roaring at least until the end of the year (some are calling for a multi-year continuation).  Others are calling for an imminent crash.  What's an investor to do?  Obviously the rational hedge is large cap value stocks- you get some of the gains in a bull market and somewhat minimize the losses in a crash.

I believe this rotation is real and will be fairly persistent (at least until the next crash, whenever that is) and have been profiting from it as I have been gradually selling off small cap growth stocks (which category had done very very well for me this year) and replacing them with value oriented funds and stocks such as VIG. Berkshire Hathaway would be another good bet.

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