VALUE VS GROWTH: WHAT IS THIS CHART REALLY TELLING US
The chart shows the return spread between Russell 3000 Value and Russell 3000 Growth from 1999 to today.
In simple terms:
when the spread is positive, value outperforms growth
when it is negative, growth outperforms value
In Q1 2026, the spread is around +11.7%.
A level we haven’t seen in years.
WHY IT MATTERS
Over the past 10–15 years, the market has been dominated by growth.
Technology, artificial intelligence, large-cap companies.
For more than a decade, growth has clearly outperformed, driven by a small number of very large names.
This has led to a clear consequence:
growth valuations have expanded significantly compared to the rest of the market.
At certain points recently, the valuation gap has approached levels seen during the dot-com bubble.
WHAT IS HAPPENING NOW
What we are seeing in the chart could be the beginning of a shift.
In recent months, we are observing:
a rotation away from the most expensive stocks
a move back toward more traditional sectors
greater dispersion in returns
This is not random.
In environments with higher interest rates, less linear growth, and increased uncertainty, the market tends to favor companies with lower valuations and more stable cash flows.
A NOTE OF CAUTION
This does not mean growth is over or that value will dominate from now on.
The relationship between value and growth is cyclical.
There are long periods when one style dominates, followed by reversals that often occur when consensus is heavily one-sided.
THE KEY POINT
This chart is not meant to predict the market.
It is meant to remind us that the market never moves as a single entity.
Beneath the surface, there are very different dynamics across sectors, styles, and individual stocks.
And that is often where opportunities emerge.
In recent years, attention has been focused on growth.
Now, something is starting to move elsewhere.
HOW I APPROACH IT
No change in strategy.
I continue to focus on:
fundamental analysis
price evaluation
gradual capital allocation
If the environment changes, I adapt.
Without chasing the market.
Later today I will publish the usual Monday portfolio update with all the details.
Have a great day everyone
@LucaMulargiu... Show More
Not investment advice. The author may have financial interests in the mentioned instruments.
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Mon May 11 2026 05:47:34 GMT+0000 (Coordinated Universal Time)
