Although growth has outperformed value over the last several years, heightened volatility in the US equity market and a fourth quarter correction has left more than a few people wondering whether value is finally going to have its day in the sun. While no one can predict how growth might perform relative to value going forward, market experts from Direxion observed a narrowing of the gap between these two styles late last year.
According to David Mazza, managing director and head of product at Direxion ETFs, the gap between the price-to-sales ratio of growth relative to value has narrowed, which may be good news for value. However, it actually remains well below the TMT (technology, media & telecommunications) selloff of the early 2000’s and was further compressed in the fourth quarter market selloff, which may bode well for growth.
Russell 1000 Index Price-to-Sales Ratio: January 1995 - January 2019
Source: Direxion, as of January 31, 2019
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