Many value investment strategies are based on value stocks’ long-term outperformance of growth stocks, by an annual average of 4.8% over the period 1927-2017. In contrast to these premium returns, value stocks have trailed growth stocks by a cumulative 32% from January 2007 through September 2018. This has caused many investors to question the merits of value-based strategies.
In an attempt to consider the implications of value’s recent deficit, MultifactorWorld examined how value stocks performed in the periods following their five worse historical periods of underperformance. In each of these successive periods, value stocks delivered premium returns. While there is no way to be certain, we agree that it is very reasonable to expect value to do well following these most recent challenges.
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The opinions expressed by featured authors are their own and may not accurately reflect those of MaimonWealth. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.