Are Growth Stocks a Risky Gamble with High Potential Rewards?

– Skewness in asset returns can result in different investor behaviors.
– Some investors prefer stocks with high right skewness, seeking the potential for outsized returns.
– Other investors avoid volatile stocks and prefer those with no skewness or left skewness.
– Growth stocks tend to exhibit more right skewness in their returns compared to value stocks.
– Skewness in returns is influenced by investor preferences for certain factors.
– When a particular factor is popular, skewness in returns tends to increase for stocks associated with that factor.
– Growth stocks were popular during the dot-com bubble, while value stocks lacked skewness in returns.
– From 2010 to 2020, growth stocks gained popularity again, while value stocks underperformed and showed no skewness.
– Investors in growth stocks may be attracted by the potential for lottery-like payouts when such stocks are in style.