Welcome to Trade Ideas.
I am Brian Price, joined today by Christian Fromhertz from the Tribeca Trade Group.
Christian, great to have you with us.
Great to be here.
So today we're talking growth versus value.
What are you seeing right now?
Yeah, sure, and really the last couple of years it's been a pretty nice trend, where
growth has outperformed value.
Right?
I mean, I think you could have stayed in growth for the most part.
And what's happened the last couple months is I think investors got a little bit too
complacent in growth.
People really kind of loaded the boat.
It's been performing very well.
And then all of a sudden, we've gotten a pretty decent sell-off in growth.
So what started to happen over the last month is value has outperformed.
And you could see that if you map a chart out between growth and value.
You could actually see that value is just starting to tick up a little bit.
And money is starting to be put back to work.
And what I've seen analyzing ETF fund flows is that there's been a pretty decent escape
out of growth.
And I think investors started to realize, hey, I really under own in value.
And they're starting to pile into value at this point.
When it comes to misconceptions in the ETF world, what are you looking at right now,
as far as it relates to the world of passive versus active management?
Yeah, sure, and that's a big debate.
And we hear that oftentimes when we talk about ETFs.
We hear, oh, it's passive, passive management.
But really from how I see the fund flows and how I see a lot of investors positioning in
them, they use it more of as an active basis, especially when we're talking about getting
into different groups.
You could do that very quickly.
So the accessibility is very quick.
We also see that a lot in the international.
I think portfolio managers, if they want to quickly get into international developed,
or international emerging, it's a lot quicker to get in and out of these international areas,
especially multiple countries by doing it via ETF.
So I'm really in the camp that ETFs are used actively.
So Christian, as far as inflows and outflows, what's some of the data you're looking at
right now?
Yeah, it's been really interesting.
And they've been a pretty good indicator.
What we're seeing is over the last couple weeks, really risk off.
We've seen a lot of inflows going into short term treasury bonds.
So believe it or not, it's things like, I'll give you a couple tickers.
It's SHY, BIL, BSV.
These are all really short term places to kind of hide your money.
Now, you can get a little bit more yields.
Because we are seeing like, about a 1.6 to 2% percent yield, depending on the ETF.
But if you're looking at in terms of flows, really pre-election, people have really taken
money off the table and gone into these areas like the T-bills ETF, which has seen in one
week about $1.5 billion of inflows.
And then also, there's been a big pullback in tech.
You know, of course, the tech sell off started a couple weeks ago.
But it's been pretty steady unwinding.
Just last week, they kind of reached I would say, almost a capitulation, where we saw $2.5
billion taken out of tech ETFs.
So again, it feels like a lot of nervous hands that are in the market right now.
And what's really nice about that is it could lead to opportunities.
A lot of times I'll use those ETF fund flows for a nice contrarian idea when I think things
have gone too far to one side of the boat.
And then shifting back to your overall thesis, what's a vehicle you're using to execute this
idea right now?
So the value ETF that I'm looking at is VTV.
That is just over the 200 day moving average.
So it's nice, because you have a really nice stop price if it starts to back off a little
bit.
And then what I'm looking for is a price target up to $113, which is the recent highs.
And this would be an end-of-year type rally?
Yeah, it'd be a nice end-of-year, maybe a Santa Claus rally type trade.
Anything else that we haven't touched upon that's important for a viewer at home to be
aware of?
You know, I just think right now is a good place to kind of get into multiple areas.
I think one of the lessons learned from October is being too complacent and having too many
eggs in one basket, as we saw in growth, can really wreak havoc in your portfolio.
What do you think drove that complacency?
Do you think it was just misunderstanding of the market?
Do you think it was people leading up to the election being nervous?
I mean, I think people were doing that just because the trade worked for so long.
And people really got used to growth outperforming value that the trade got a little bit over
bought.
Christian, let me ask you as far as this out-performance of value versus growth, do you think this
is part of a secular trend, or something that's a little bit more short term?
I think it could have some legs to it.
Because if you look at the chart between value and growth over the last couple years, it's
really been straight down.
Meaning, value has under- performed growth.
So now that we're starting to see that uptick in value, I think it could have some legs
to it.
And again, to the degree of being under owned, I think it's got a chance to outperform for
a bit.
Is this a play more on technicals and flow of funds?
Or are there any fundamental aspects that you're looking at?
Yeah, sure, and it's a bit of a combination.
I think part of it too, you know, the reason why money is starting to shift back into value
is it's gotten pretty cheap.
Some of the names in tech, it is what it is.
They've gotten expensive.
And I think that's why we're seeing that rotation and starting to see value outperform growth.
And this is a move you're doing on behalf of your own portfolio.
That's correct.
So with that in mind, as we close here Christian, can you give me your trade in about 30 seconds
or less?
Sure, I still think value is under owned.
I like going long VTV, so the Vanguard ETF with a price target up to $113, which is the
recent high stop price 200 day moving average.
Christian, thank you, as always for joining us.
Thank you.
So Christian likes buying value stocks.
Specifically, he suggests buying the Vanguard value ETF, ticker symbol VTV, at current levels.
His stop loss is the 200 day moving average with a target price of $113 over the next
two months.
That's Christian Fromhertz from the Tribeca Trade Group.
And for Real Visions Trade Ideas, I'm Brian Price.