The return of value investing

Since Benjamin Graham, often hailed as the father of value investing, successfully pioneered his net-net value strategies in the 1930s, value investing has, on average, outperformed growth investing by 4.9% over 10 year rolling periods over the past century. Only twice since the thirties have growth stocks surpassed value over a ten-year rolling periods: during the dot-com bubble in the early 2000s and from the financial crisis to the present. Viewing these exceptions from a long-term perspective, we attribute the current underperformance of value stocks primarily to the era of low interest rates rather than a fundamental shift in investment paradigms. With interest rates rising again, we anticipate a favorable shift towards value investing, particularly for those investors who are seasoned and patient enough to adopt a historical view.