On Value Premium, Part I: The Existence

Abstract

A great deal of academic research provides solid evidence that value investing generated better returns than growth investing from the early 1970s to the mid-1990s. However, the relatively poor performance of value stocks in the late 1990s generated suspicion that value investing was failing. Such claims were invalidated by empirical research showing that value stocks’ slump in this period was not caused by a change in fundamental patterns, but rather by investors’ overly-rosy expectations for new technology companies.