Over the long term, aggressive growth stock outperform other major asset classes - a long-term investment horizon de-risks volatility.
Aggressive Growth Stock Outperformance
Historically aggressive growth has not necessarily been a discrete category of its own but looking back at the upper end of the growth spectrum over the past 50 years, what you see is market outperformance over the other segments of equities, be it growth or value, or even looking at non-equity investments. Aggressive growth has certainly returned the most over the past years. In the past decades, they have tended to do very well in upward-moving markets, and they tend to be the first stocks to come in when there are negative macro factors or bear markets.
De-Risking Volatility With A Long-Term Investment Horizon
It's a bumpier ride on the way up but overtime, what you find, and this is consistent over the past five decades, is that growth stocks and aggressive growth stocks in particular tend to return the most. If you can hang in there for the ride, you will generate much higher returns. Even though most people don't have a 50-year time horizon when investing, what we're looking at is the historical trends, and you do see that there might be one or two, or even three-year periods where aggressive growth is softer than its counterparts, you do see that aggressive growth stocks if you look at it over five or 10-year periods, are going to give you the most bang for your buck in equity investing.
Golden Eagle has produced perhaps the only data bank in the investment business that chronicles the performance of aggressive growth stocks. Aggressive growth stocks, first and foremost, are really a subset of the growth category. If you go to the Morningstar box, you'll see nine boxes. Of the two styles, the broad styles are growth and value. If you have a combination of growth, they call that a blend. Aggressive growth style is under-researched, under-recognized, and under-owned by investors, which is one reason that we had to create a data bank. Our data bank goes all the way back to 1958 and it shows that aggressive growth stocks for a $100 investment at the end of 1958 would've grown to $99,000 at the end of 2022. Notwithstanding the worst year on record for this investment style, because it plummeted by 52%. Notwithstanding that deep decline, it still exhibits a long-term track record that is twice the S&P return over that period and four times as much as the value style.
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Please note, that the thoughts expressed in this podcast are those of the presenter. This is not, nor should it be considered an offer or a solicitation of an offer for investment.
Manager of the Golden Eagle Growth Strategy
