As a style of investing, value was challenged during the entire bull market. As mentioned above, it is the first to rebound after a recession is over.

Bhansali is doubtful it will happen this time. She views the dramatic rebound in equities since late-March—highlighted by the week shortened by Good Friday, which was the best week for stocks in 46 years—as a head fake.

When it comes to traditional value, Bhansali maintains many of these businesses don’t have the margin of safety that value companies once did. “You don’t buy junk at clearance sale prices,” she says. “The worst is ahead in terms of earnings.”

A global investor, Bhansali points to European banks to illustrate her case. On the surface, many of these financial institutions look incredibly cheap. But unlike U.S. banks, they never recapitalized after the financial crisis and they are about enter a period of even greater pain.

Bhansali isn’t that much more optimistic about growth stocks as an asset class, as investors continue to overpay for them. “Growth companies don’t need to see their earnings disappear, they just need to disappoint,” she says. “The S&P 500 is full of overleveraged companies. Both growth and value [stocks] will prove vulnerable if there is a prolonged earnings recession.”

Worse yet, the long economic expansion that ended more abruptly than any prior cycle created conditions where “a lot of cyclical stocks were masquerading as growth stocks,” she continues. She cites Google and Facebook as two prominent examples.

Advertising is a cyclical business, but during the Great Recession online ad spending was in its infancy. In the 12 years since then, it has grown to almost 60% of all advertising and Google and Facebook dominate that market.

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