Historically, value stocks have outperformed growth stocks in the US, and the outperformance in a given year has often been striking. Data covering nearly a century backs up the notion that value stock s—those with lower relative prices—have higher expected returns.
Value premiums have often shown up quickly and in large magnitudes. For example, while the average annual value premium since 1927 has been 4.1%, in years when value outperformed growth, the average premium was over 14%.
There is no evidence investors can reliably predict when value premiums will show up. Rather, a consistent focus on value stocks is essential to capturing these outsize value premiums when they do appear.
Logic and history support a commitment to value stocks so investors can be positioned to take part when those shares outperform in the future.
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source When It’s Value vs. Growth, History Is on Value’s Side
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