Capital Markets Summer 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

Average of 2001 & 2008 Recessions

2020 Recession

III

S&P 500 Growth

S&P 500 Value

S&P 500 Growth

S&P 500 Value

20%

20%

IV

0%

0%

-20%

-20%

V

Change in EPS

Change in EPS

-40%

-40%

0 2 4 6 8 10 12 14 16 18 20 22 24

0 2 4 6 8 10 12 14 16 18 20 22 24

Months After Beginning of Recession

Months After Beginning Recession

VI

Source: FactSet and Alger

23