Gavekal Capital: North American Growth Counter-Cyclicals Outperforming So Far In 2014

Wednesday, January 29, 2014

North American Growth Counter-Cyclicals Outperforming So Far In 2014

We like to break out stocks based on their cyclical or counter-cyclical nature and compare what "type" of stock is outperforming on a relative basis. We break cyclicals into three baskets (early, late, and hyper) and we break counter-cyclicals into two baskets (interest rate sensitive and growth). 

In North America, growth counter-cyclicals significantly outperformed stocks no matter how we sliced it (relative to North American cyclicals, all MSCI North American stocks or all MSCI World stocks) from February 2011 to April 2013. For the remainder of 2013, growth counter-cyclicals steadily lost ground. Since the calendar flipped to 2014, this relationship has flipped once again and growth counter-cyclicals have outperformed by a little over 3% relative to cyclical stocks. 

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