Value Stocks Beat Growth Stocks
More evidence that value stocks outperform growth stocks over time.
In
1994, Josef Lakonishok, Andrei Shleifer, and Robert Vishny published a
landmark study investigating the performance of value stocks relative
to that of glamour securities in the United States over a 26-year
period. Their research concluded that value stocks tended to outperform
glamour stocks by wide margins. However, their study did not include
the glamour-driven markets of the late 1990s and early 2000s. What
effect might this period have on their conclusions? To find out, the
Brandes Institute updated their Value vs. Glamour research, now through
June 2008, to examine the comparative performance over a 40-year period.
Indeed, value stocks continued to outperform growth stocks. From 1968 through 2008, the average annualized return for the most expensive decile of stocks by book value was 6.9% while the least expensive decile was 16.2%.
Value stocks also beat growth stocks outside of the United States as well.
The outperformance of value occurred over almost all 5-year time period since 1980 for both small and large stocks.
If you are an investor with little time to devote to the market, i.e. most people, and you have a long time horizon, your best strategy is to either buy a basket of cheap stocks or buy the market when stocks are cheap.
And now, stocks are cheap.
»
- Read original article.
Delicious
Digg
Magnoliacom
Google
Yahoo- 1567 reads