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Will Tax Cuts (Finally) Reawaken Value?

By Advisor Perspectives
Capital Markets

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Value stocks are cheap, relative to growth, but have lacked a catalyst to rally. Russ discusses why tax cuts could be that spark.

If you squint really hard, you can almost see value stocks beginning to stir. Large cap U.S. value has nominally outperformed growth month-to-date. That said, value is still trailing its sexier cousin, growth, by roughly 1500 bps (basis points, or 15%) in 2017.

The question many are now asking is whether that will change if tax cuts are enacted? Given that an untested faith in fiscal stimulus led to value outperformance in late 2016, perhaps an actual tax cut might provide a more durable rally in value? My view is probably yes, assuming you believe that tax cuts will impact the real economy.

Read more at Advisor Perspectives.

Photo: Allan Ajifo

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