Update on the Value Premium

Empirically, in most countries, the long-term realized returns from value stocks are greater than growth stock returns.  Why this should be so, however, remains a puzzle.  Indeed, in some recent years, the value premium is negative when measured by the returns of certain value and growth stock indexes.  Indeed, some commentators suspect that the value premium is ephemeral, and that investors should not expect value stocks to outperform in the future.  This essay explores the rationale for maintaining a tilt towards value stocks in a globally diversified portfolio.

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