Are Value Stocks Worth Considering In Today’s Economy?

Published on: Nov 10, 2021
image_printPrint Article

The transition from growth to value and back to growth stocks often accelerated during the pandemic. Growth-oriented stocks usually outperform when the economy is on the rise. Therefore, growth stocks took the path of the Coronavirus: They tanked during the lockdown, they rose again when the economy reopened, and then stumbled again until vaccines were introduced. Now that vaccination rates have stalled, and the delta variant of COVID-19 is running rampant, economists are once again pondering how growth stocks can keep up their pace.


Is it Time to Rebalance Your Portfolio?

According to the chief U.S. economist at Morgan Stanley, projections for third-quarter GDP have dropped from 6.5% to 2.9%. With this in mind, now may be a good time to work with your financial professional to use recent gains and rebalance an investment portfolio, evaluating whether to diversify with high-quality stocks in cyclical sectors. Morgan Stanley believes that a sector rotation may prompt outperformance by value stocks.[1]Lisa Shalett. Morgan Stanley. Sept. 14, 2021. “Next Market Rotation Could See Value Stocks on Top.” Accessed Sept. 16, 2021. If you’d like to discuss your current asset allocation and future growth opportunity, please give us a call.


What is Value Investing?

Value investing is a strategy of choosing stocks that seem to be trading lower than their book value (as measured by company assets, revenue, dividends, earnings, and cash flows). The idea is to invest in them while the stock market is underestimating their value, on the premise that their prices will eventually increase to align with the true health and potential of the company. Note that value stocks are more appropriate for longer-term investors who have the time and discipline to wait for market recognition. Also, be aware that value stocks are more likely to pay out dividends than growth stocks.[2]Niladri Mukherjee. Merrill Lynch. Aug. 17, 2021. “What is a value stock?” Accessed Sept. 16, 2021.


Warren Buffett, one of the world’s most successful investors, is considered an advocate of value stocks. That’s because rather than look for outright stock price increases and sector momentum, he views each company holistically, considering the current share price, historical company performance, debt, and profit margins.[3]Investopedia. Dec. 22, 2020. “Warren Buffett: How He Does It.” Accessed Sept. 16, 2021.


At this point, the growth versus value stock debate hinges largely on the direction of the pandemic. During the height of lockdowns in 2020, value stocks outperformed growth due to several factors, such as lower energy prices from reduced consumer demand. This fall, with the delta variant throwing the country back into a tailspin, it may once again be prudent to check out well-established companies, many of which have a long history of dividends and dividend growth, which may be underpriced for value.[4]Dan Rosenburg. TD Ameritrade. Aug. 11, 2021. “Growth vs. Value Stocks: What’s the Outlook Post Pandemic?” … Continue reading


While value stocks are worth considering, it is more important to reiterate portfolio diversification during the pandemic, given its up-and-down effect on our economy. Diversifying across countries, industries, sectors, and investment strategies can help eliminate the follies of trying to predict the market throughout an unprecedented influence like the global pandemic. We know retirement can be complex, and we hope this helps break down some of that complexity. Peace of mind in retirement requires a plan. Schedule an appointment with us today to get started.

Schedule a Call Today!

What to hear more about this topic? Subscribe to our YouTube Channel. 

At Beacon Capital Management, we believe having peace of mind in retirement, requires considering all of your options, and creating a plan. If you like this article, check out the Beacon Retirement Strategies Podcast, where we talk to some of the sharpest and most professional financial advisors in Nashville. We understand that retirement planning can feel complicated and overwhelming, so we take a few moments to break down some of the more complex parts of retirement so you can have a better understanding of how they apply to you.


Disclosures: Beacon Capital Management, LLC “(Beacon Capital”), is an independent financial services firm helping our clients to create retirement strategies using a variety of investments and insurance products to custom suit their needs and objectives. Advisory services are offered for a fee by Beacon Capital, a registered investment advisor with the Securities and Exchange Commission (“SEC“).  SEC registration does not imply a certain level of skill or training.  Investing involves risk.  Past performance is not a guarantee or indicative of future returns.  The value of your investment(s) will fluctuate, and you may gain or lose money.  Beacon Capital is not affiliated with Beacon Accounting and Tax, or Knight Legal. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.  None of the information contained on this website shall constitute an offer to sell or solicit any offer to buy a security or any insurance product. Commentary & Third-Party Disclosures Beacon Capital’s article on this Site is for informational purposes only and does not constitute a recommendation to buy or sell securities. You should not rely on this information as the primary basis of your investment, financial, or tax planning decisions. You should consult your legal or tax professional regarding your specific situation.  Certain sections of this commentary may contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. This article may contain links to other third-party websites, including links to the websites of companies and/or governmental agencies that provide related information, products, and services. These external links are provided solely for convenience, and the inclusion of such links does not necessarily imply an affiliation, sponsorship, or endorsement of those links. Beacon Capital does not endorse, approve, certify, or control these external Internet addresses and cannot guarantee or assume responsibility for the accuracy, completeness, efficacy, timeliness, or correct sequencing of information located at such addresses. Third-party data is obtained from sources believed to be reliable but Beacon Capital cannot guarantee the accuracy, timeliness, completeness, or fitness of any third-party data. Tax Disclosures Beacon Capital does not represent in any manner that the tax consequences described herein will be achieved or that Beacon Capital’s activities in managing a client’s investments will result in any particular tax consequence. The tax consequences that Beacon Capital may pursue are complex and uncertain and may be challenged by the Internal Revenue Services (“IRS”). The information with regard to this activity was not prepared to be used, and it cannot be used, by any Client to avoid penalties or interest. Clients should confer with their personal tax advisors regarding the tax consequences of investing with Beacon Capital, based on their particular circumstances. Clients and their personal tax advisors are responsible for how the transactions conducted in an account are reported to the IRS or any other taxing authority on the Client’s personal tax returns.  Beacon Capital assumes no responsibility for the tax consequences to any Client of any transaction. We are not tax professionals. Clients should consult qualified legal or tax professionals, such as tax attorneys or CPAs, regarding their specific situation. Trademarks Beacon Capital, the Beacon Capital logo, and other marks are registered trademarks and service marks of Beacon Capital. Other third-party marks displayed are trademarks of their respective owners, and the use of such trademarks does not imply an association with those third parties or an endorsement of any third-party goods or services.


1 Lisa Shalett. Morgan Stanley. Sept. 14, 2021. “Next Market Rotation Could See Value Stocks on Top.” Accessed Sept. 16, 2021.
2 Niladri Mukherjee. Merrill Lynch. Aug. 17, 2021. “What is a value stock?” Accessed Sept. 16, 2021.
3 Investopedia. Dec. 22, 2020. “Warren Buffett: How He Does It.” Accessed Sept. 16, 2021.
4 Dan Rosenburg. TD Ameritrade. Aug. 11, 2021. “Growth vs. Value Stocks: What’s the Outlook Post Pandemic?” Accessed Sept. 16, 2021.

Pin It on Pinterest