But as you can see, things are getting…interesting.
Figure 1: U.S. Growth Stocks Relative to High-Dividend Stocks
In the chart above, I marked the big turning points with orange arrows. Figures 2–4 show the returns between them.
Figure 2: Index Returns, 8/4/2006 (1st Orange Arrow) through 3/9/2009 (2nd Orange Arrow)
Figure 3: Index Returns, 3/9/2009 (2nd Orange Arrow) through 4/18/2013 (3rd Orange Arrow)
Figure 4: Index Returns, 4/18/2013 (3rd Orange Arrow) through Present (8/20/2019)
Because high-dividend companies comprise the value stocks of value stocks, notice that our Index did particularly poorly when value was “off”? Likewise, when value came snapping back in 2009, WisdomTree’s Index ripped higher, beating the S&P 500 by nearly double digits annually for years on end.
When deep value is on, deep value is on.
It has been forever since hunting for big dividends has paid off, so I can’t say if this is just the kind of extreme needed to cause a change in market leadership. But I will tell you this: Respect any chart that is near or touching March 6, 2009, levels.
You cannot invest directly in an index.
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