Why value stocks will struggle to repeat their vast 2022 outperformance in 2023

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Are so-called value stocks still living up to their name? Some aren't so sure.

After more than a decade of lackluster returns, the value factor beat the broader market and outperformed rival growth stocks in 2022 by the widest margin since 2000.

Still, both broad categories suffered sizable declines during a bear market that sent both stocks and bonds reeling, leaving few true winners aside from the U.S. dollar and oil and gas firms. In the chart, Cicione compared the historical ratios for both the S&P 500 value index SP500PV and S&P 500 growth index SP500PG . To be sure, there are other indexes of value and growth stock performance, including the Russell 1000 Value index RLV and Russell 1000 Growth index RLG .

Megacap growth stocks like Meta Platforms Inc. META and rivals like Google owner Alphabet Inc. GOOG led the U.S. market higher for roughly a decade as the Federal Reserve kept interest rates anchored near zero, fueling a bull run that led to outsize gains in more speculative, growth-oriented assets, while businesses with slower prospects for sales growth often got left behind.

 

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