Here is a link to our recent chat on The Meb Faber Show regarding the details on Value Investing: An Examination of the 1,000 Largest Firms:
Among stock investors, a common strategy/belief held is Value investing — buying stocks that are relative cheaper on price/fundamental ratios.
The idea behind why value investing works is that Value stocks are either (1) riskier and/or (2) have been mispriced by the market. In theory, these elements of risk/mispricing lead to expected above-market returns.
However, this strategy has failed over the past couple of years, causing many to doubt/question what is going on with the strategy. Given the recent underperformance, there have been a lot of articles written about the “Death of Value Investing.”
Some of these articles that examine this question, “Is Value Dead?”, have examined the performance of two well-known indices, the Russell 1000 Value index, and the Russell 1000 Growth index. These are widely referenced in the industry, are market-cap-weighted, and have returns going back to 1979.
You can listen to the podcast via the link below: