When Will Value Investing Return to Favour?

The success of high-profile growth stocks such as Apple and Facebook has meant value investing has recently failed to deliver

Dan Lefkovitz 9 January, 2018 | 2:39PM

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History suggests that value stocks beat growth stocks over the long run. Investors are compensated for the risk of owning troubled companies with low-priced shares. While short-term investors chase trendy growth stocks whose price-tags overestimate their prospects, longer-term shareholders prefer companies that under-promise and over-deliver.

But recent market behaviour has left many investors wondering when value will come back into fashion. Of course, predicting the timing of market turning points is a fool’s game. The unexpected, powerful, and ultimately short-lived rally in value stocks after the US election demonstrates this point.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Amazon.com Inc3,211.01 USD1.52
Apple Inc115.32 USD3.71
Facebook Inc A280.83 USD4.92
Netflix Inc504.21 USD3.70
Starbucks Corp88.30 USD1.30
The Walt Disney Co121.54 USD2.59

About Author

Dan Lefkovitz

Dan Lefkovitz  is strategist for Morningstar’s Indexes group

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