- I’ll analyze market data since 1927, and look at growth versus value returns.
- I firmly believe that value investing returns can be further increased by applying a bit of common sense.
- The differences in risk and returns are staggering, but few will actually become value investors.
It’s almost funny that Eugene Fama, the Nobel prize winner and face behind the efficient market craze, has evolved over time and acknowledged that value investing beats growth.
The two market anomalies that show how markets aren’t efficient after all are size and value. The findings were published in the now famous 1993 Journal of Financial Economics article by Fama and French, Common Risk Factors In The Returns On Stocks and Bonds. Markets aren’t efficient and you can easily beat the market by following a value strategy and by buying small caps (stocks with a market capitalization below $2 billion). More →