Value stocks have been getting less valuable.
"This is a trend that goes all the way back to 2007, and it's gotten much worse," Eddy Elfenbein, editor of the Crossing Wall Street blog, said Friday on CNBC's "Trading Nation."
"Value's supposed to be safety during the storm, and the policies of the Federal Reserve have made the benefit of taking on growth a lot more attractive for investors than the safety of value, and that's left a lot of stocks behind," he said.
Value, of course, is a relative term. But S&P Dow Jones Indices generates the value index by selecting those stocks in the S&P 500 that have some combination of a high book-value-to-price ratio, a high earnings-to-price ratio and a high sales-to-price ratio.
This brings up a more prosaic reason why value may be lagging. The opposite index, S&P 500 growth, is largely composed of information technology stocks, with a healthy showing from the market-leading consumer discretionary sector, and hardly any energy names. Meanwhile, energy stocks make up 12.5 percent of the S&P 500 value index. Indeed, the single-largest weighting is enjoyed by Exxon Mobil.
Still, beyond the sector makeup, "you're seeing a difference between what's being rewarded and what's being punished," observed Scott Kubie, chief strategist at Omaha, Nebraska-based investment manager CLS Investments.
"Economic growth, in general, has been scarce. So companies that are able to grow on their own business plans and the strength of their market are being rewarded at a much higher ratio," Kubie said. "Growth stocks are outperforming because value stocks are more sensitive to the overall lower levels of economic growth that we've seen in this country."
Still, Kubie is bullish on the value index given its larger weighting toward financials. As the Fed raises rates, financials can be expected to outperform.
Meanwhile, such a move may also diminish the risk-seeking behavior that Elfenbein sees as behind the interest in growth.