When It’s Value vs. Growth, History Is on Value’s Side

Historically, value stocks have outperformed growth stocks in the United States, though recently that hasn’t been the case. While disappointing periods emerge from time to time, the principle that lower relative prices lead to higher expected returns remains the same.

  • Data covering nearly a century backs up the notion that value stocks – those with lower relative prices – have higher expected returns. On average, they have outperformed growth stocks by 4.54% annually since 1928.
  • But there are no guarantees, and results vary over time. Growth stocks have recently outperformed value stocks. That outperformance has been a stark departure from long‑term averages.
  • While there’s no way to know where stocks are going next, value has trailed growth in the past before rebounding strongly.

Logic and history argue for a commitment to value stocks, so investors can be positioned to take part when those shares outperform in the future.

Shore Point Advisors

This post was prepared and first distributed by Dimensional Fund Advisors.

Shore Point Advisors is registered as an investment adviser with the State of New Jersey. Shore Point Advisors only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Past performance is not indicative of future returns. All investment strategies have the potential for profit or loss. There are no assurances that an investor’s portfolio will match or outperform any particular benchmark. Content was prepared by a third-party provider. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. All expressions of opinion reflect the judgment of the authors on the date of publication and are subject to change.

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