The old economy fights back

Article Abstract:

There may be a move toward value stocks and away from growth stocks as bond yields rise with an acceleration in world economic growth. Growth stocks are more likely to be affected by a rise in bond yields than are value stocks. Stocks that have fallen over a five year period tend to perform well in the subsequent three years, which again points to the attractions of value stocks. There are still risks involved in holding value stocks, such as the danger of falling government bond yields, and a further rise for technology stocks.

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Exuberance goes, irrationality stays

Article Abstract:

Active investors shopuld have an information advantage, and knowledge of investment psychology can be helpful. There is a tendency for people to overestimate their ability to judge asset values when conditions are uncertain. This means that growth stocks often have exaggerated valuations, and that further rises tend to occur once stock prices start rising, since a rise appears to confirm the judgement of the investor who has purchased those stocks. This means that investors should purchase value stocks with momentum, and sell growth stocks with falling prices.

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Puzzling over success

Article Abstract:

The performance of a low-risk selection of stocks is assessed, and it is seen to have performed better than the market as a whole.

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