All These Rate Hikes Are Bad For Growth Stocks – Until They’re Not

Reda Farran

4 months ago3:13 mins

All These Rate Hikes Are Bad For Growth Stocks – Until They’re Not

The entire US stock market has plummeted this year, but growth stocks’ collapse is especially noticeable: the fast-growing investor darlings have seen their valuations wiped out as the Fed embarks on its most aggressive rate hiking campaign in decades. But if all these rate hikes push the US economy into a recession, that’s a backdrop that could actually work out very well for growth stocks – if you can identify which ones…

Why would growth stocks do well in a recession?

First, the relative appeal of growth stocks changes for the better during a recession, when most other companies see their earnings shrink or stagnate. Put differently, when growth is scarce, investors flock to the few companies that can still expand their earnings – in other words, growth stocks.

Second, when the

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