Growth investors are, by nature, optimistic. They believe we are living through a once-in-a-generation wave of technology-led change and that a small group of outlier companies can make exponential gains by shaping the future. The role of the successful investor is to identify these businesses.
It is an approach that in some cases has delivered spectacular returns over the past decade, as cheap money flooded economies and the prices of a string of tech companies soared.
But over the past year, the same investment philosophy has run into the buzzsaw of rising interest rates, inflation, war and the prospect of a looming recession. Many of these once high-flying names have been left nursing heavy losses, as tech stocks were sold off and the easing of lockdowns led so-called Covid-19 winners such as Zoom and Peloton to fall back to their pre-pandemic valuations. Investors have bought staid defensive names that have largely been overlooked by Wall Street for years.