You: Where do you want to go for dinner tonight?
Them: How about Italian?
You: Sure, sounds good.
Them: I also heard that new Greek place is good.
You: I’m fine with that.
Them: No, we can do Italian.
Them: If that’s what you want to do.
You: You’re the one that suggested it.
Them: But you were quick to agree.
You: OK. Let’s do Greek then.
Them: I guess that’s fine.
Them: But I was in the mood for Italian. You always pick.
You: I didn’t pick anywhere and don’t care. Just pick a place.
Them: Well if you are going to argue about it, I don’t want to go.
We’ve all had versions of this conversation where you or the person you were talking to just couldn’t make up their mind. At the end of the day, it only causes trouble and plans are ruined.
The market is having its own back and forth this year trying to decide between growth and value. Just today, growth stocks are getting slaughtered while value stocks are up marginally. As an example, the Russell 1000 Growth index is down 1.8% on the day while the Russell 1000 Value index has managed to rally 0.25%. The chart below shows the daily performance spread between the Russell 1000 Growth index and the Russell 1000 Value index for each day in 2020. Today’s performance spread between the two indices marks the ninth time this year that value has outperformed growth by more than two percentage points. At the other extreme, there have also been eight trading days where growth outperformed value by more than two percentage points.
So how does this year’s frequency of days where the performance spread between the two indices was more than two percentage points stack up to other years? The chart below shows the daily performance spread between the two indices going all the way back to 1990. Over the last thirty years, the only two periods where we saw a frequency of these large daily dislocations was back in 2008 and the period spanning 2000 and 2001. In fact, with 17 days this year where the performance spread between the two indices was greater than two percentage points, the only other years that saw a higher frequency of large dislocations were 2000 (54) and 2001 (28). If you think the market has been indecisive this year, in 2000 we saw these types of daily dislocations an average of once per week. Click here to view Bespoke’s premium membership options for our best research available.