The Value of Value Investing Part I: Staying the Course

If you’ve been an evidence-based investor for a while, you know the drill:

You’ve already built your low-cost, globally diversified portfolio to help you achieve your personal goals. You’ve done so by tilting your portfolio toward or away from long-term sources of expected returns – and their risks. When those risks arise, if your goals haven’t changed, neither should your portfolio.

Let’s assume you’ve already embraced this advice, and are relatively comfortable maintaining your investment resolve. You also may be aware that investments concentrated in value stocks have delivered higher long-term returns than their growth stock counterparts. 

But it’s also no secret that the value premium has been hiding for quite a while. At least in U.S. markets, value stocks have been underperforming relative to growth stocks for around a decade.

This has led some investors to wonder whether the value premium has lost its appeal. Even among financial academics and practitioners, healthy debate exists over what to make of the past decade. Are the underwhelming returns a temporary, if painfully long bump in the road, or does it represent a permanent new reality for value stocks?

We won’t keep you in suspense:

Nobody knows for sure what the future holds; we cannot guarantee success. But based on historical and ongoing evidence, we have found no compelling reason to alter our approach to value investing.

In this five-part series, we’ll explore why we feel it remains in your best interest to keep the faith on value investing, relative to your personal financial goals and risk tolerances.

We’ll be exploring value investing even further with our next segment: the historical context of the value premium. In the meantime, don’t hesitate to be in touch if we can add value (pun absolutely intended!) to your evidence-based investment strategies.  

Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.

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