Why growth stocks could keep rising

Why growth stocks could keep rising

The share prices of growth companies – particularly quality businesses such as the much heralded FAAMGs – have been on a tear since March. How much further could they go?  Well, quite a bit further I think, if rates stay low and governments keep providing financial support.

Recent headlines suggest COVID-19 is not going away any time soon. The US is amid a surge of cases in the Midwest. In the Slovak Republic protests against restrictions are gaining momentum and becoming violent despite their health system being perilously close to collapse. Meanwhile France’s COVID-19 cases are hitting records as are Italy’s and the Netherlands’, Ireland is facing stricter lockdowns, and the US has added the most cases since the end of July.

However, rising infection rates and expectations that a vaccine is moving deeper into 2021 are currently a positive for markets because it means that central bank and fiscal support will continue for some time, ensuring low rates and wage subsidies.

MORE BY RogerINVEST WITH MONTGOMERY

Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.