April 10th, 2019 | Barron's
Is Value Investing Dead? No, Says Gregg Fisher in Barron’s
Value investors—those seeking bargain-priced stocks—have been waiting in the cold for a long time. The value style has lagged for years now despite its historical long-run advantage over focusing on companies with fast earnings growth. According to Gerstein Fisher research cited in “Value Investing Will Beat Growth Again—but Maybe Not for Years to Come” (Barron’s, April 5, 2019), US value stocks posted an annualized return 2.7 percentage points higher than growth over the very long term.
The question is whether the pattern we’ve been seeing of late is a (pronounced) cyclical advantage for growth that will revert to value’s favor the two investment styles have always traded leadership position in the past or a permanent shift to growth. It’s the former, asserts Gregg Fisher, Gerstein Fisher Founder, Portfolio Manager, and Head of Research, in commentary quoted in the article. “We don’t like to think ‘this time is different,’” he wrote. “At some point, the cycle will likely turn and value will regain the upper hand. But it’s hard to say when.”
And so while several factors positive for growth—including low interest rates and high investor appetite for tech stocks—continue to play out, Gregg’s comments suggest that more patience on the part of value investors should pay off in time. When that will happen, though, can’t be predicted accurately.