July 2023 is month that can be described as all tides lifts all boats or is the over all economy is improving? There are leading indicators and lagging indicators, there are indices that track all kinds of different metrics. So, what's underneath the hood? The stock market continuously rising despite economic headwinds of inflation, higher interest rates, and those living paycheck to paycheck.

As Warrant Buffet once said, “Only when the tide goes out, do you learn who has been swimming naked.”

The first half of 2023 was an shown to have a lot and underlying issues with the general economy as well as specific areas of the market. not all areas are rosy as some pundits would like us to think it is.

Stocks and bonds both declined during the first quarter of 2022 leaving investors with few places to hide. Value stocks outperformed Growth stocks as sector rotation continued. The best performing sectors were energy, utilities, and consumer staples. The worst performers were consumer discretionary, technology, and communications. Commodities, gold, and cash were the safe havens. Bitcoin essentially finished the quarter flat.

Large cap and small cap stock cycles last much longer than most investors think. Therefore, when it comes to asset allocation, size matters. These lengthy cycles cause some investors to remain over invested longer than they should, especially when they have become accustomed to the rewards.

In Part 1, we looked at the 40-year history of Growth vs. Value. In Part 2, we view Growth and Value within the context of Large Cap and Small Cap. We find Small Cap Value ahead at the turn.

The current Growth cycle in stocks has lasted more than a decade. For most of the past year, Value has started to overtake Growth. Is this another head fake, or time for Value to take the lead?