It’s early, but value stocks are already outpacing growth stocks – but both are leaving precious metals in the dust.
So says Real Money’s Jonathan Heller, who links an aggressive Federal Reserve policy on interest rates to an upward spike in value plays in 2022.
“It's been an interesting start to 2022,” Heller said recently in Real Money. “First, in the continuing battle of growth versus value, value is enjoying an early lead. Within large-caps, the Russell 1000 Value Index (up 0.82%) is ahead of the Russell 1000 Growth Index (down 4.81%) by a sizable 563 basis points."
In addition, "within small-caps the Russell 2000 Value Index (up 0.04%) is leading the Russell 2000 Growth Index (down 5.84%) by 588 basis points."
Within the “smallest of the small”, the Russell Microcap Value Index (down 0.32%) is beating the Russell Microcap Growth Index (down 5.62%) by 530 basis points. “Both small-value indexes are padding their substantial leads from 2021 so far; last year Russell 2000 Value won by 2,516 basis points while Russell Micro Value ended up an enormous 3,374 basis points,” Heller said.
“While it’s way too early to proclaim value a winner for 2022, this is the type of environment where cheaper names should do better than their growth cousins,” he added.
Heller also points to precious metals, which are off to a ”rough start” in 2022.
“While gold is down 1.6%, silver is down 3.9%. The Sprott Physical Silver Trust (PSLV) - Get Sprott Physical Silver Trust Report, my top pick for 2022, is down 4.2%,” he said. “If there was ever a time for a precious metals rally, this would be it, but it’s not panning out that way so far.”