Last week, we took a look at the equity market through the lens of the Gordon growth model. Our analysis suggested that for the market to continue to rise from here, the biggest driver might have to be compression of the (still very high) equity risk premium, which comes against rising interest rates and a lower longer-term earnings growth rate. In this week’s Economics Weekly, we take a look at what the current macro environment was telling us with respect to investing in growth or value stocks. Our conclusion is that while the growth stocks cycle might look a little long in the tooth, there is still further room to run.
For a copy of this report or to subscribe to the Economics Weekly or Economic Indicators reports, please contact your William Blair representative.
Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.