Which will make it a good time to buy growth stock, although I am going to wait a bit because I don’t think it has reached the bottom yet.
Growth stocks are trying to raise money right now.
Ex: Tesla needs money to buy new factories in Germany. Or Tesla will have to raise money to build Cybertrucks and compete with Ford. That means they have to spend today's high-cost money now, to sell cars of the future (which will be innately discounted because of expected inflation).
Selling a Cybertruck in 2024,
AFTER inflation wipes away 5% to 10% of its value is pretty bad, especially when they had to raise $5 Billion in 2021 money to build the factory.
$5 Billion in 2021 money after 10% inflation is going to be equivalent to $5.5 Billion in 2024 money (assuming ~3% inflation in 2021, 2022, and 2023). If you think we get more than 3% inflation each year, then adjust this math accordingly (We see that spending $5 Billion
today will be equivalent to maybe $6 billion or even 6.5 billion in a few short years if inflation goes higher than expected) . Higher rates of inflation innately hurt growth companies. That's why people are fleeing them. Spending today's money in hopes of making money in the future (especially when "today's money" will come from either selling shares (depressing the price), or selling bonds (putting TSLA on the hook on a loan)).
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In contrast, a value-company like Ford already has the money to build the factory
without need of raising money. In fact, Ford already has many factories, workers, and equipment that they can (relatively cheaply) reconfigure into making the F150 lightning. Ford won't need a loan or secondary offering to reconfigure its factories (or even build new ones), because Ford has an already established cash flow.
Ford is also going to be selling 800,000+ F150 ICE vehicles this year, and maybe a few million other vehicles. Earning money
this year with high revenues / high profits is worth far, far more than promises of earning money 3 or 4 years from now (when inflation will eat away the money). In times of inflation, you want to earn money before the inflation eats away the money.
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Inflation, and Bond Yields, are a headwind against growth. Its easy for growth strategies to work in times of low inflation (see the entire decade of 2010 to 2019). But with inflation fears beginning to kick in, the rules of the market are going to change.
