Value Investing Historically Outperforms Growth

Growth stocks in general and in particular technology based companies have vastly outperformed over the last 2 decades. However, "From 1927 through 2019, according to the data compiled by Nobel Prize laureate Eugene Fama and Dartmouth professor Kenneth French, over rolling 15-year time periods, value stocks have outperformed growth stocks 93 percent of the time," says Dr. Robert Johnson, finance professor at Creighton University.

The problem with value stocks is there are a lot of value traps and some stocks are cheap for a reason. No one knows exactly when quality value stocks (such as Walmart, Hersey and Disney) will outperform growth counterparts but if you have a long enough time frame and had to buy one group for a coffee can portfolio value definitely wins hands down.

An easy way to track the different performances is with the chart below.

![image.png](https://images.hive.blog/DQmUbgP9xm5yEoYUjKe3HJY8RYvKBCr4zfugPyA6pAA2X5b/image.png) source: https://www.longtermtrends.net/growth-stocks-vs-value-stocks/

An important trend change could be in the works beginning end of 2021 and we could be in for a vast outperformance of value over growth similar to 2000 growth peak. A lot of the 2000 trend change was a wipe out of market cap from growth names who had unsustainable business models (but even Amazon fell 80%+ during the 2000 bear). So this current trend change could be a lose less bad situation.

You would still be in a better position if growth fell 50% and value only fell 25% given it would take a lot less time and effort of value stocks to get back to break even.

What are your thoughts? Are you going to start overweighting value or are you going to stick with growth stocks?

https://images.hive.blog/DQmY512usbvaZuf9xLMmZfgwzk9bBohaThjJqj4AkDFjSt6/pg%20divider2-07.png Divider provided by barge

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. The information provided should NOT be considered advice. The topics discussed are risky and have the potential to lose a substantial amount. I am not an investment professional and therefore do not offer individual financial advice. Please do your own research before investing.

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