This could be ‘the worst time ever’ to stack on these stocks, but investors are still doing it anyway.

And those historical standards show that the value, as measured by the Fama / French US Value Index, has outpaced growth by 12.8% on a yearly basis compared to 9.7% on the Fama / French US Growth Index, historically. That differential is almost as large as that between stocks and bonds, Nelson explained.

However, over the past decade, growth stocks, led by a concentration of high flights, have an advantage of 16% per year compared to 7.5% in value. “Growth stocks have become very expensive,” wrote Nelson. “Their prices have grown much faster than their fundamentals have improved.”

He used this chart to show that growth and value stock valuations are at least as “out of control” as they were during the dot-com bubble, and perhaps even more:

“What does this mean?” Nelson asked. “Obviously not good for future growth prospects.”

After the bubble burst in 2000, large-cap growth stocks took a long time to recover, while value stocks outperformed, particularly small caps. But the trend goes far beyond that period.

Nelson said the US Fame / French growth index, Measured over 10-year periods, has outperformed the US value index just 7% of the time since 1927. And when that happened, the value , in turn, outpaced growth in the following decade.

“Smart investors know they don’t pay to buy more than what has been done well recently, especially if that area of ​​the market (bonds, large stocks or growth stocks) is a segment with the lowest long-term relative returns.” Nelson said. With that in mind, is now the worst time in history to accumulate in growth stocks and give up value? It sure looks like this. “

Growth seemed to have taken a bit of a breather in Tuesday’s session, with the Nasdaq Composite COMP comprised of the technology,
-0.80%
trading lower as the DIA Jones Industrial Average DJIA,
+ 0.59%
added 159 points. The S&P 500 SPX,
+ 0.16%
It was also higher.