US stocks continue to grind higher with no sell signals in-sight with the influential “Big Tech” names continuing to drag the market higher. MM is looking for the Value Index to outperform Growth over the next 6-months but its important to fully understand our thoughts / logic:
- We are bullish bond yields and reflation over the coming year which is effectively reversing the last 18-months trend when Growth trumped Value.
- The likes of Banks & Resources (Value) should enjoy a tailwind from this view.
- Conversely the likes of IT & Healthcare (Growth) historically experience headwinds during such periods of strong economic expansion.
Importantly we are not saying investors should rush out and sell great businesses like Microsoft (MSFT US), Apple (AAPL US) and Amazon.com (AMZN US) but as we saw earlier in the year, and especially in Q4 of 2018 when the market decides bond yields / interest rates are going higher there are few places to hide in the growth names hence our Flagship Growth Portfolio has been tweaked more towards value names as opposed to simply exiting growth stocks altogether.
MM’s remains bullish US equities medium-term
