THE BIG PICTURE tors consider very attractive is European financial companies.“ Price-to-book levels on European financials are very low compared to the pre-financial crisis levels,” Shriver notes. Moreover, European central banks have been lowering interest rates faster than the Federal Reserve.

Interest rates play a critical role in shaping the growth-value framework, and they are likely to provide some indication of where different groups are headed, in the view of Rob Almeida, global investment strategist and portfolio manager at MFS Investment Management.“ If you think interest rates will rise, value will outperform,” he argues, adding that if rates fall it will favor growth.“ Growth stocks outperform when there is no growth. Value stocks outperform when there is an abundance of growth.”

Almeida thinks one reason foreign equities may outperform is that they are more economically sensitive. But in the 2010 era, when growth stocks soared to the moon, they were propelled by some of the lowest interest rates in modern history. Opinions on interest rates today vary, and the Fed is likely to lower them

American stocks are“ expensive” and have“ less margin of safety,” notes Jasmine Yu, chief investment officer of Bryn Mawr Trust Advisors.“ You need to be selective and nimble.”

Jasmine Yu, CIO, Bryn Mawr Trust Advisors

in the next year, but virtually no one sees a replay of the near-zero rate world of the previous decade. Counterintuitive though it might pear, Vanguard’ s Davis argues that if AI is apas transformational as its acolytes believe, the beneficiaries will be ordinary businesses, not the highfliers caught up in the current euphoria. This, in his view, favors value stocks.

“ Research shows that during past technological revolutions, early gains often concentrated in established technology

leaders before diffusing more broadly,” Davis writes, comparing the implementation of AI to other eras of innovation.

“ During the 1990s, healthcare providers and financial institutions benefited significantly from advancements in computing and telecommunications,” the book argues.“ The electrification of the U. S. economy in the 1920s spurred rapid growth in industries such as manufacturing and transportation, demonstrating that the diffusion of general-purpose technologies benefits sectors beyond their immediate origin.”

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