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Do value stocks outperform growth stocks?

This is a great article from Larry Swedroe about the benefits of a strategy that involves investing in Value Stocks.  It does a good job of providing a lot of useful data – and of explaining the pros and cons of investing in Value stocks and value-tilted Mutual Funds.

Let me know what you think.



(MoneyWatch) Ever since the 1992 publication of “The Cross-Section of Expected Stock Returns,” by Eugene Fama and Kenneth French, which demonstrated that value stocks had outperformed growth stocks (and small outperformed large), there has been a debate about its findings.

The first question people raised was that the outcome was period-specific — July 1963 to December 1990. Since data is now available back to 1927 and we have another 22 years of data, we can address that question. As the table below demonstrates, over the full 85-year period (1927-2011), large-cap value stocks produced higher returns than large growth stocks, and small-cap value stocks produced higher returns than small growth stocks. (We’ll use the Fama-French indexes, which measure returns using academic definitions of asset classes. Utilities have been excluded from the data.)

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