Growth / quality set to outperform value / cyclicals?

1. Interest rate expectations have peaked.
2. Inflation continues to come down.
3. Value sectors tend to be more cyclical (more sensitive to the deepening economic problems).
4. Quality stocks are higher margin / more pricing power (more defensive in downturns).
5. Quality / growth stocks have stronger balance sheets (less issues in economic downturns).
6. Stable defensive structural growth stocks behave like bond proxies (bonds doing well now).

This period reminds me of the global financial crisis, back in early 2008, when investors were starting to see serious economic issues, and wondering how bad it was going to get. Value got crushed after that for sometime.

A lot of attention is focused on the valuation of some of these growth companies… I think the focus should be on the mounting problems some value stocks are facing.

It is interesting that on days like today companies like MongoDB, Cloudflare, Datadog are all up. Most people would winch at their valuation, but they've been de-rated a lot, have structural growth drivers, and are akin to bond proxies. Not saying I would own these, but its indicative of a trend.