Latest / Stock Picking with Fexingo: Individual Equities, Research, and Building a Concentrated Portfolio / How Value Stocks Are Quietly Outperforming Big Tech in June 2026
Transcript
- Lucas: So the Nasdaq is down over five percent in the last five days, and big tech is taking a beating. Microsoft off nine and a half percent, NVIDIA down eight and a half, Amazon nearly six percent lower. Luna: Yeah, that's a nasty stretch. Meanwhile, the Dow is only down four-tenths of a percent, and the S&P 500 is down almost three percent. So there's clearly a divergence happening. Lucas: Exactly. And when you look under the hood, it's not just that small caps are holding up better. Value stocks broadly are outperforming. The iShares S&P 100 Value ETF, IWD, is down just 0.4 percent in the same window. The Vanguard Value ETF, VTV, is actually up 0.3 percent. Luna: That is striking. So what's driving this? Are we seeing a genuine rotation out of growth into value? Lucas: Well, let's look at the specific names that are working. JPMorgan is up 5.3 percent in five days. Bank of America up 5 percent. Berkshire Hathaway up 3.8 percent. Energy stocks like Exxon and Chevron are flat to slightly positive. These are classic value plays. Luna: And they're all benefiting from the same macro backdrop, right? The jobs report on June 5 came in hot, which pushed expectations for Fed rate cuts further out. Lucas: Right. Chair Warsh now faces a policy test. The market had been pricing in a cut by September, but after that report, that timeline got pushed. higher for longer rates actually benefit banks because they can earn wider net interest margins. And it benefits energy companies that generate strong free cash flow. Luna: But it hurts tech stocks that trade on future earnings promises. Microsoft's P/E is still around 35. NVIDIA's is above 40. When the discount rate stays higher, those distant cash flows get discounted more heavily. Lucas: Exactly. And we saw that play out. The Nasdaq had been on a tear in 2025 and early 2026. Now the market is repricing. But I want to be careful about calling this a full rotation. Look at Apple — down just 0.3 percent in five days. That's a value-like performance from the largest tech company. Luna: That's a good point. Apple is trading at about 30 times earnings, and it's got that massive buyback program. It's almost a hybrid — growth and value in one package. Lucas: So maybe what we're seeing is a rotation within tech. The high-multiple AI beneficiaries are getting punished, while the steadier, cash-generating tech names hold up. But the broader narrative is that value is having a moment. Luna: And it's not just banks and energy. Consumer staples, healthcare, utilities — those sectors are also flat to up. It's a classic defensive posture. Lucas: One other data point: the Russell 2000, which tracks small caps, is down 2.5 percent. So it's not like value is universally strong — it's more that large-cap value is outperforming large-cap growth. The small-cap value index isn't doing as well. Luna: Right. So the rotation is really about size and valuation together. Big, cheap, and steady is winning. Big, expensive, and speculative is losing. Lucas: That's a great way to put it. Now the question is whether this lasts. If we get a surprise Fed pivot or a big AI earnings beat, maybe growth comes roaring back. Luna: But if the economy stays hot and rates stay high, value could keep grinding higher. The next CPI print is later this week, and that could be the next catalyst. Lucas: Absolutely. Look, we talk about stock picking on this show, and episodes like this remind me why we keep it ad-free. We're not here to sell you a newsletter or push a product. We just want to help you think about the market more clearly. Luna: Yeah, and that's only possible because listeners who find value in these conversations sometimes choose to support the show. If that's you, it's buy me a coffee dot com slash fexingo. No pressure, just an option. Lucas: Appreciate that. So back to the market — one name I'm watching closely is Berkshire Hathaway. It's up nearly 4 percent in five days, and it's sitting on a huge cash pile. If value keeps working, that cash could be deployed into more value plays. Luna: And Berkshire is essentially a value stock wrapped in a conglomerate. It's got insurance, railroads, utilities, and a big Apple stake. So it's benefiting from both the value rotation and Apple's resilience. Lucas: Exactly. And the buyback is aggressive — they've been buying back their own stock at a pace of over a billion dollars per quarter recently. That's a signal that management thinks the stock is cheap. Luna: So for a stock picker, the question is: do you chase the value names that have already moved, or do you look for laggards? I'm thinking about something like Pfizer, which is up only 1.6 percent in five days but yields over 5 percent. Lucas: Pharma is interesting. It's defensive, it's cheap, and it's got a dividend. But it also has patent cliff risks. That's a trade-off a value investor has to weigh. Luna: What about energy? Chevron is flat, Exxon is flat. They've got strong free cash flow and they're buying back stock. But oil prices are volatile. Lucas: Energy is a classic value trap if oil rolls over. But if the economy stays strong, demand holds up. I'd rather own a bank right now, because the catalyst is clear: higher rates for longer. Luna: So your takeaway for listeners is: watch the macro, watch the jobs data, watch CPI. If rates stay high, keep an eye on financials and other value sectors. If rates drop, growth might come back. Lucas: Right. And don't assume this is a permanent shift. Markets rotate. But right now, the data is telling us that value is working. So it's worth paying attention. Luna: Agreed. Thanks, Lucas. Lucas: Thanks, Luna. See you next time.