Nearly every asset class has been bruised by this year’s market, with the speculative ones battered the worst, details an article in Forbes. With the S&P 500 down more than 21%, high-quality stocks and bonds have also been pummeled, especially with blue chip stocks such as Amazon, Meta, and Alphabet down 31%.

Value stocks have fared a bit better, but bonds have dropped significantly; the long-term treasuries in the TLT basket are down over 25% and corporate bonds have fallen 16%. In fact, the only exceptions to the downturn are energy stocks and Japanese stocks that have a hedged Yen exposure. But though many of the high-flying speculative stocks from the last few years will likely vanish forever, good quality value stocks from companies that possess solid balance sheets alongside thriving cash flows will almost certainly recover and climb back up, the article maintains. Picking high-quality stocks with a strong cash flow that justifies the price is the key to value investing and relies on the basic tenet that “no stock can trade forever on a trend divorced from its financial underpinnings.”

Value investing usually cycles in when growth investing spirals out of favor, such as after the dotcom burst in 2000 when value stocks outperformed by almost 60% for the following 8 years. The same way that bull markets follow bear markets, value cycles will come after growth cycles; that much is certain in a very uncertain time.