Value Investors Believe Their Long Winter May Soon End
The time-tested strategy lagged for years as growth stocks led the market.
David Booth, chairman and co-founder of Dimensional Fund Advisors.
Photographer: Ilana Panich-Linsman/ReduxWhat do you do when your money-management strategy, even one with a multidecade history of success, simply isn’t having a good run? That’s the problem facing value investors.
Their strategy can be summed up as bargain hunting. They buy stocks trading at low prices based on earnings or the underlying value of a business. Although this makes powerful intuitive sense—paying less should lead to gaining more—the Russell 1000 Value index has trailed its counterpart benchmark of high-priced growth stocks in nine of the past 11 years. Since the end of 2016, growth stocks have returned a cumulative 100%. Value stocks? Just 15%.