urn2bfree
Full time employment: Posting here.
- Joined
- Feb 14, 2011
- Messages
- 853
A lot of smart people are on these boards. Maybe my thoughts are nonsensical musings, but I wonder-
Are Value stocks of the 21st century really like Value stocks of the past?
I have long held a portfolio tilted to value based on the "value premium" described by Fama and French, and touted by many successful investors. The long-term track record for Value has indeed been better than Growth though not for the last 15 years, and barely for the last 20. Many believe the tide will turn, the mean will regress, and Value will again emerge superior to Growth either based on the reward for the risk or as a correction of the behavioral biases that lead to Value stocks being temporarily unfavored.
BUT-
in the past stocks became Value stocks based on being worth more than investors thought they were, thoughts based on research methods of old and investor behavior much more driven by individuals than today's information overload, algorithms and the institutional dominance in the market.
Maybe the number of stocks that lose favor with investors in the market nowadays "deserve" their devaluation more than they did in the old days? Is that possible? Or am I just talking myself into jumping from a decided upon strategy because it has underperformed for 15 years?
Are Value stocks of the 21st century really like Value stocks of the past?
I have long held a portfolio tilted to value based on the "value premium" described by Fama and French, and touted by many successful investors. The long-term track record for Value has indeed been better than Growth though not for the last 15 years, and barely for the last 20. Many believe the tide will turn, the mean will regress, and Value will again emerge superior to Growth either based on the reward for the risk or as a correction of the behavioral biases that lead to Value stocks being temporarily unfavored.
BUT-
in the past stocks became Value stocks based on being worth more than investors thought they were, thoughts based on research methods of old and investor behavior much more driven by individuals than today's information overload, algorithms and the institutional dominance in the market.
Maybe the number of stocks that lose favor with investors in the market nowadays "deserve" their devaluation more than they did in the old days? Is that possible? Or am I just talking myself into jumping from a decided upon strategy because it has underperformed for 15 years?