Value vs Growth: A Century of Cycles, the Fed, Bitcoin and Gold

A confession before we start: investing is mostly a fashion game in a serious costume. You can put it in a suit, give it a Bloomberg screen and call it “markets”, but underneath it behaves exactly like school — what was cool last year isn’t cool this year. What worked for twenty years suddenly stops working. Then it comes back. That, in one sentence, is the last hundred years of value vs growth investing.

This isn’t going to give you a final answer on which style is “better”. The answer depends on the decade, on interest rates, and largely on what the Federal Reserve does at its next meeting. But I’ll walk you through the last hundred years, explain why the Fed changes everything, and show where oddities like Bitcoin and gold fit in. Seatbelt on.

First, in plain English: what each thing means

Value investing — buying companies that trade below what their assets or earnings are worth. Boring, mature, cash-generating businesses. Banks, oil majors, utilities, industrials. The stuff your parents bought.

Growth investing — buying companies that grow fast, even if they don’t make much money today (or any at all). Tech, biotech, software. The promise of huge future earnings. The stuff that ends up in TikTok ads.

Both are legitimate strategies. Both work. They just don’t work at the same time — and that’s where it gets interesting.

1920–2000: the golden age of value

If you had bought value stocks between 1926 and 2000, you’d have beaten growth by a wide margin. Fama and French, Ibbotson, every academic who has touched the subject reaches the same conclusion: buying cheap, at low multiples, worked. Full stop.

Think about that. That period includes the Great Depression, the Second World War, the American fifties, the stagflation of the seventies, the boom of the eighties and nineties. Eight decades covering wars, inflation, stagflation, recessions, property bubbles, the end of Bretton Woods, the fall of the Soviet Union. And in almost every rolling window of that century, buying undervalued companies beat buying exciting stories.

Because interest rates, on average, were reasonable. When money costs something — 5%, 6%, 8% — investors demand companies earn money soon. Profits twenty years out, discounted at 8%, are worth very little today. So the market rewards companies that produce cash now, not the ones promising to do so in 2045.

Warren Buffett built his career this way. Benjamin Graham wrote the manual. Their books are almost all from this period, which is why business schools still teach them: because for eighty years, that was what worked.

2000–2021: the world flips upside down — the age of growth

Then the 21st century arrived, and everything that used to work stopped working. Worse — it stopped working for twenty years straight.

If you bought a value fund in 2000 and held it against a growth fund until 2021, you got crushed. The Nasdaq 10x’d. Amazon went up thousands of percent. Google, Apple, Microsoft, Netflix, Meta — the FAANGs — created more market cap than any group of companies in human history. Meanwhile European banks, oil majors, utilities — the core of value — went sideways for two decades.

The reason? Interest rates. In 2008 the Fed cut rates to 0%. For the next thirteen years, money was essentially free. And when money is free, future earnings discounted back are worth almost as much as today’s earnings. Suddenly it makes sense to pay 100 times earnings for a company promising to make money in ten years. It makes sense that Tesla trades at absurd multiples. It makes sense that Zoom — which hadn’t earned a penny — is worth more than IBM. Because the discount rate was zero.

That was the ZIRP era — Zero Interest Rate Policy — and it was brutally good for growth. It also created monsters: companies that had never made money valued in the billions, a new unicorn startup every week, coins with ridiculous names going from zero to billions in months. The party lasted until late 2021.

2022 onwards: the pendulum swings back

In 2022, inflation showed up. The Fed, reluctantly, had to hike. They hiked faster than in any cycle of the past forty years — from 0% to 5% in about eighteen months. And suddenly the game changed.

Growth companies dropped 30%, 50%, 70%. The ones that weren’t making money collapsed. Bonds also fell — something that almost never happens at the same time as equities. And value quietly started to work again, slowly, like a tortoise crawling out after twenty years in its shell.

2022, 2023 and 2024 have been surprisingly good to oil majors, banks, utilities, industrials. Not because those businesses suddenly became exciting, but because at 5% rates, people want earnings now, not in 2040. It’s the exact same logic as 1970, just applied fifty years later.

Is the growth era over? Probably not entirely — AI has put Nvidia and Microsoft on steroids. But the era when any company with a .com or a slick pitch deck was worth billions? That one is gone. For now.

Why the next Fed meeting matters so much

Everything above reduces to one sentence: interest rates rule. Full stop. When rates are high, value wins. When rates are low, growth wins. It’s almost a law of markets.

Which is why every FOMC meeting — the Fed committee that sets rates every six weeks — is the single most important economic event on the planet. That’s not hyperbole. Whatever Jerome Powell (or whoever’s in the chair when you read this) decides moves the price of every stock, every bond, every house and every currency in the world.

What matters isn’t so much what they do — it’s the signal they send. A rate cut says: “the economy is cooling, let’s pour some fuel in.” Markets celebrate, growth rallies, small caps explode. A rate hike says: “inflation is still here, we need to tighten.” Value holds up, growth suffers, gold often catches a bid.

If you want a defensive, fundamentals-led strategy — quality, cash-generative businesses — the next meeting will tell you whether the market is about to move in your favour. If you’re leaning into growth, you’re watching for a pivot to cuts. The FOMC calendar should live in your diary. I mean it.

Bitcoin: the speculative asset

We have to talk about Bitcoin, because ignoring it isn’t really an option anymore. But let’s be honest: Bitcoin is not value. Bitcoin is not growth. Bitcoin is, right now, pure speculation. I don’t say that as an insult — I mean exactly what the word means.

Bitcoin produces no cash. It pays no dividend. It has no earnings to discount. There is no CEO running capex models. Its value depends, wholly and exclusively, on there being more people who want to buy it tomorrow than today. That is the literal definition of speculation — it’s not an opinion.

That doesn’t mean it has no place in a portfolio. Speculative assets have a role: in small doses, they can deliver brutally asymmetric returns. But size matters. Never — and I want this tattooed somewhere — never put anything into Bitcoin that you can’t stomach watching drop 70% in three months. Because it has happened. And it will happen again.

Interestingly, Bitcoin behaves like growth on steroids: when rates rise, it falls further than the Nasdaq. When rates fall, it rallies harder. It’s not a safe haven. It’s the opposite — it’s emotional leverage on monetary policy.

Gold: the permanent asset

Gold is the opposite of Bitcoin in almost every way. It has been money for five thousand years. It has survived empires, world wars, currency collapses, revolutions. And it’s still there, in the same vault, weighing the same, shining the same.

Gold doesn’t produce cash either. It doesn’t pay a dividend. But it’s not speculation — it’s something else. It’s insurance. Insurance against government lunacy, against inflation, against a collapse of trust in fiat money. You don’t buy gold hoping to get rich — you buy it hoping to not get poor when everything else goes sideways.

A classic allocation to gold is between 5% and 10% of a portfolio. Not much more, because in normal environments it underperforms equities. Not much less, because when it does its job, it really does it: in the 1970s gold 20x’d while equities went nowhere. In 2008, in 2020, in 2024 — every time people have doubted the system, gold has rallied.

And one important detail: when the Fed cuts hard and fast, gold tends to rally. Because low rates mean a weaker dollar, and a weaker dollar means real assets re-price higher. It barely ever fails. Another reason to watch the next FOMC if you’re holding gold.

Factor investing: don’t pick a side, pick several

If after reading all that you’re tired of having to guess whether it’s value’s turn or growth’s turn, there’s a third path — and it’s probably the most sensible of the lot. It’s called factor investing, and it’s what academics and quant funds have been doing since the nineties.

The idea is simple: instead of betting “all-in on value” or “all-in on growth,” you accept that market returns can be decomposed into several factors that, historically, pay over the long run. The five best-known are:

• Value — cheap multiples (low P/E, low P/B). The classic Graham-and-Buffett factor.
• Size — small companies. Historically beat large caps, though with more volatility.
• Momentum — whatever has gone up over the last 12 months tends to keep going up a bit longer. Sounds absurd but it’s worked for a century.
• Quality — high ROE, low debt, stable earnings. The “boring but reliable” factor.
• Low volatility — the least jittery stocks deliver similar returns with half the drama. The weirdest anomaly in the academic literature.

What’s interesting is that these factors are mostly uncorrelated with each other. When value struggles, momentum tends to work. When growth blows up, quality holds up. Combining four or five factors with balanced weights gets you a portfolio that doesn’t live or die by the next Fed meeting.

Today you can do this with ETFs. iShares, Vanguard, WisdomTree and others offer single-factor ETFs (MTUM for momentum, QUAL for quality, USMV for low-vol, etc.) or multifactor ETFs (GSLC, LRGF, etc.) that build the cocktail for you. You don’t even have to pick individual stocks.

Is it perfect? No. Factors also go through rough patches — value was flat from 2000 to 2020, size disappointed for years. But the bundle, over the long run, tends to outperform the index at similar or lower volatility. If there’s anything close to a free lunch in markets, this is it.

And the best part: it takes the guessing off your shoulders. Factor investing doesn’t ask you to know whether it’s value’s turn or growth’s turn. It asks you to diversify your return engines and let the statistics do the rest.

So what do I do with my money?

Look, I can’t tell you what to do — I don’t know your situation, I’m not your adviser and this isn’t advice. But I can compress a century’s lesson into four points:

1. Diversify across styles and factors, not just across stocks. Own value, growth, quality, momentum, low-vol. If you don’t want to guess the rate cycle, build a multifactor portfolio with ETFs and let the balance do its work.
2. Watch the Fed, not the headlines. The FOMC tells you more about the future of your portfolio than any TV pundit ever will.
3. Treat Bitcoin as what it is: speculation. Small size, never essential, always money you can afford to lose entirely.
4. Own some gold. Always. It’s the one asset that has survived everything. A 5–10% sleeve lets you sleep better.

Cycles last decades. Value ruled for eighty years, growth for twenty, and the pendulum is swinging back. What never changes is that interest rates, central-bank discipline and human nature run the whole show. Everything else is a still photo from a much longer film.

Oh — and don’t forget the next FOMC. I’ll bet anything that day moves your portfolio more than any decision you make yourself.