Value stock bulls argue that a blue wave would lead to “a massive stimulus package to rev up the economy and spur inflation,” setting the stage for a rally in value stocks “and finally knock big Tech off its perch atop the U.S. equity market.” This according to an article in Bloomberg.
The article explains that value stocks “tend to be cyclical companies that ride economic growth trends, such as banks and energy producers” and that a steeper yield curve tends to work in their favor—although its far from a sure thing.
The article notes that historical trends favor value improving: In seven of the last nine presidential elections, it reports, factors like value and volatility have outperformed their historical averages in the seven months after the election, regardless of which party wins. It stipulates, however, that the surge in Covid cases “doesn’t bode well for a recovery in economically sensitive stocks. Value bulls may have to be a little choosier.”