Why serious investors shouldn’t fall in love with growth stocks

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Most people would have wrongly picked the Canadian growth stock index, investing experts say

The value-stock triumph isn’t necessarily a fluke, explains Marcelo Taboada, an associate portfolio manager with Tulett, Matthews & Associates in Montreal.

But if that $10,000 were invested in Canadian value stocks tracking the MSCI Canada Value Index, it would have averaged 10.3 per cent. That would have turned $10,000 into $1.06-million over the same time period. That doesn’t mean value stocks win every decade. But during the past 83, rolling 10-year periods, value stocks beat growth stocks 85 per cent of the time.

In contrast, investors have high expectations for growth stocks. As a result, when a growth stock’s business earnings don’t match or exceed expectations disillusioned investors often sell en-masse.

 

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