Capital Markets Spring 2020
V
Risk Mitigation Style Wars
• Understanding the downside to sales, earnings, and cash flows in a difficult economic environment is key to understanding risk in portfolios ‒ Value stocks have often acted like sailboats that depend on the wind of economic activity, while Growth stocks enjoy a secular motor to help protect against volatility
I
II
Look for Stocks Where Fundamentals May Prove Resilient
III
S&P 500 Growth
S&P 500 Value
S&P 500 Growth
S&P 500 Value
20%
20%
0%
0%
IV
-20%
-20%
-40%
-40%
Change in EPS
Change in EPS
V
-60%
-60%
0 1 2 3 4 5 6 7 8 9 10 11 12
0 1 2 3 4 5 6 7 8 9 10 11 12
Months After Beginning of 2001 Recession
Months After Beginning of 2008 Recession
VI
Source: FactSet and Alger
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