Is Rotating Out of Growth and into Value Really the Best Option?

However, If stocks, particularly those within the technology sector, are to come back, it will need some help from the heaviest of hitters–the FANG (Facebook, Amazon, Netflix, Google) stocks, which have been languishing for the most part amid October’s sell-off. However, they are the same names that helped spur the 10-year bull run and if the markets want to end 2018 on a positive note, it will need the FANG stocks to perform.

“It’s been a tough month across the board, whether you’re in the growth index, or in the value index, or in the S&P 500. All these indexes have broken their bull market trend levels. I think we’re at the lower end of what could be this new developing range. We’re momentum investors and we’re still seeing the best opportunities in more growth-oriented industries like software,” said Ari Wald, head of technical analysis at Oppenheimer on CNBC’s “Trading Nation.”

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Looking at the iShares S&P 500 Value ETF (NYSEArca: IVE) and iShares S&P 500 Growth ETF (NYSEArca: IVW) head to head, Wald’s comments underscore the pain seen in both value and growth. Both ETFs have been tracking lower, but value, represented by IVE, has been slightly ahead.
Is Rotating Out of Growth and into Value Really the Best Option?In the end, market experts say that whether it’s growth or value, the best strategy is to just be defensive–being selective with stocks whether the focus is on value or growth.
 “You should emphasize being defensive overall,” said Chad Morganlander, portfolio manager at Washington Crossing Advisors. “What we’ve noticed over 27 years of doing this is that when global growth starts to decelerate, that growth stocks actually are quite vulnerable. Momentum starts to break down, and you start to see growth companies have to ratchet down their future expectations.”

In a recent poll on CNBC, readers were asked to help settle the value versus growth debate and thus far, it appears that a best-of-both-worlds strategy is winning.

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