6. Growth > Value Redux

At first blush, it seems unusual to suggest that a portfolio composed of high-flying growth stocks could be a contrarian play.

But across Wall Street, strategists at Bank of America, JPMorgan, Barclays, and PIMCO are all bullish on value, looking for inexpensive stocks to outperform in 2016. This change in leadership will be grounded in firmer economic growth and a rising rate environment, according to proponents of value stocks.

Fundstrat’s Thomas Lee has gone as far to suggest that the FANG stocks—Facebook, Amazon.com, Netflix, and Google (Alphabet)—make for better shorts than longs in the year ahead, based on the historical performance of a previous year’s big winners.

HSBC, however, doesn’t think a style rotation is in the works.

“2016 will be a ‘more of the same year’ as non-cyclical growth and momentum will be the key alpha strategies again,” wrote analyst Volker Borghorr in a report published on Dec. 11. “The world has not really changed with regard to style investing in the last 3 years and we doubt that 2016 will deliver a big swing.”

This view is aligned with the other key manner in which HSBC’s strategists are marching to the beat of a different drummer in 2016. They are calling for a substantial decline in the U.S. 10-year Treasury yield amid an environment in which growth remains relatively scarce.

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