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Equity investors like it when the markets are in “risk-on” mode.

What’s that mean? Well, it means when investors are more willing to take risks. When this happens, the stock market heads higher… and with a stronger trend.

A few areas that indicate “risk-on” are small and micro-cap stocks, junk bonds, and growth stocks (among others). Today we look at growth stocks and compare them to their counterpart value stocks.

Above is a “monthly” ratio performance ratio chart of the Vanguard growth stocks ETF (VUG) to Vanguard value stocks ETF (VTV). Here you can see where (in time) growth stocks have outperformed value stocks. The steepest move higher came over 8 months in 2020, as the stock market raged back from the coronavirus crash. Since then, the growth/value stocks ratio has consolidated in a potentially bullish “cup” formation.

A breakout by this ratio at (1) would send a positive message to the broad market! Stay tuned!