Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / How the Bull Market Is Rewarding Value While Growth Stumbles
Transcript
- Lucas: Let's start with a number I find genuinely striking. The Nasdaq Composite lost three and a half percent in the last five trading days. The ARKK innovation ETF dropped more than six and a half percent. But the Dow Jones Industrial Average? Flat. And the NYSE Composite actually gained nearly a full percent. Luna: So the headline sell-off is really a growth / tech sell-off. The rest of the market isn't panicking. Lucas: Exactly. And I think that distinction is the most interesting story in markets right now. We are seeing a sharp rotation out of high-multiple growth names into value, into cyclicals, into the parts of the market that had been ignored for most of this bull run. Luna: Walk me through what's driving it. The economy is still solid — we just got GDP growth at two point one percent annualized, up from near zero last fall. Lucas: That's the key. The economy is growing at a decent clip, the Fed has held the funds rate at three point six three percent for months — no cuts, no hikes. So the macro backdrop is stable. The market is repricing growth stocks because their valuations got stretched, not because the bull market is ending. Luna: Right. And we have specific ETFs to point to. IWF, the iShares S&P 100 Growth ETF, down three and a half percent in a week. VUG, the Vanguard Growth ETF, down three point two. That's a meaningful pullback. Lucas: Meanwhile, a name like Shopify actually gained three percent. So it's not even a pure tech sell-off — it's a flight from the most richly priced names. The rotation is very selective. Luna: And I think this is actually healthy for the bull market. You don't want a rally that's entirely dependent on a handful of mega-cap growth stocks trading at fifty times earnings. Lucas: Absolutely. Look, if today was actually useful to you — if thinking about this rotation helps you make sense of your portfolio — the reason we can do this without ads is listener support. People who find value here toss a few dollars at buy me a coffee dot com slash fexingo. Luna: Yeah, that's what keeps these conversations ad-free and grounded. Just a simple way to say this helps. Lucas: Alright, back to the data. The S&P 500 itself is still at 7,413 — down only one point three percent in that same five-day window. So the broad index is holding up. That's a signal that the rotation is not a panic, it's a repricing. Luna: So what does this mean for an investor who's been heavy in growth ETFs for the past two years? Are we saying they should pivot? Lucas: Not necessarily pivot wholesale, but the data suggests you need to be more selective. The bull market is entering a phase where earnings and reasonable valuations matter more than narrative. Growth isn't dead, but the easy money in high-duration stocks is probably behind us. Luna: Duration — that's a great way to put it. These are stocks that are essentially long-duration bets on future cash flows. When rates stay stable and growth is moderate, the discount rate on those far-off earnings doesn't change much, but the market is still demanding a premium for risk. Lucas: Exactly. And look at the economic indicators — nominal GDP is up to almost 32 trillion dollars, real GDP at 24.2 trillion. The economy is growing, but at two point one percent, not five percent. So companies need to show actual profit growth, not just promise it. Luna: That explains why ARKK got hit so hard — six point six percent in a week. Those are mostly unprofitable or early-stage growth names. They're the most sensitive to the rate and growth narrative. Lucas: And if you look at a stock like CrowdStrike, down nearly six percent. Or Datadog, down one percent — actually relatively resilient. Cloudflare down two and a half. So even within cybersecurity and software, there's dispersion. The market is punishing the names with the highest multiples, not the entire sector. Luna: Is there a historical parallel here? A time when a bull market broadened out in a similar way? Lucas: I think 2016 is the most direct analogue. The economy was growing modestly, the Fed was slowly normalizing, and the market saw a pronounced rotation from growth into value, particularly financials and energy. That rotation lasted about 18 months before growth came back. Luna: And the bull market didn't end then either. It kept going through 2018. Lucas: Right. So the playbook is: don't fight the rotation, but don't assume it's permanent. The bull market is still intact; it's just rewarding a different set of stocks right now. That's actually healthy — it means the rally has room to run. Luna: So the key takeaway for our listeners: if you've been all-in on growth, it's time to rebalance into some value exposure. Not because growth is broken, but because the market is paying you to diversify. Lucas: Exactly. And the numbers back it up. The NYSE Composite — which is more value and industrial oriented — is up nearly one percent in a week. That's the market telling you where the momentum is right now. Luna: I like that. The bull market is rotating, not retreating. Lucas: That's the headline. And as we head into August, I'll be watching whether that rotation accelerates, or if growth stocks find a floor. Either way, it's a fascinating time to be paying attention.