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Dr. Paul Price
Dr. Paul Price
Articles (504)  | Author's Website |

Value was the place to be in the past decade

October 11, 2010

The numbers are in and it was a sweep for ‘Value’ over the 10 years ended September 30, 2010…

mutual-fund-results-10-years-ended-sep-2In all four size categories, from small-cap through large-cap, Value funds handily outperformed both‘core’ and ‘growth’ type funds over the whole decade. Growth was the worst place to have been in those 10 years.

It was a ‘small is beautiful’ 10 years as absolute returns grew inversely with the market cap of the holdings. That’s not surprising when you consider how overpriced the big-cap S&P 500 was in 2000 near the top of that market cycle.

Dr. Paul Price



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Rating: 4.6/5 (9 votes)


Sivaram - 6 years ago    Report SPAM

Yeah, value did well in the last decade... but... I haven't looked up the numbers but if you count from 2003 (bottom of prior crash) to the present, I'll bet growth outperformed value.

Value looks good on 10 year metrics because growth stocks were wildly overvalued--way beyond even the 1929 levels!!! Anyone avoiding those overvalued growth stocks would have done well. But as the market likes to play games, most so-called value stocks got decimated in the 2008 crash. Financials were a staple of value investors--many still love them for some reason--but they got killed. In fact, many so-called value investors, including Warren Buffett, were lucky that many governments saved key financial institutions.
Dr. Paul Price
Dr. Paul Price premium member - 6 years ago
The numbers for the 10 years INCLUDE the crash of 2008-2009 so your point seems misplaced.
Batbeer2 premium member - 6 years ago
You write better than you read.
Hester1 - 6 years ago    Report SPAM

Value did well during the last 100 years too
Kfh227 - 6 years ago    Report SPAM


If you avoided growth stocks that were overvalued, wouldn't that jsut be value investing?

Also, if there were no bailout, what would happen to your overall quality of life? The bailout was a must students of the great depression ran the show.
Sivaram - 6 years ago    Report SPAM

KFH227: "If you avoided growth stocks that were overvalued, wouldn't that jsut be value investing?"

It depends on the definition but I would say that value investing involves fundamental analysis. My guess, without any proof, is that people who did well in the early 2000's and call themselves value investors may not really be so. Just because one avoided the wildly overvalued stocks may or may not be indicative of talent.

My point, then, is that it is just as important to avoid overvalued value stocks.

KFH227: "Also, if there were no bailout, what would happen to your overall quality of life? The bailout was a must students of the great depression ran the show."

I am in favour of the bailout but I feel that the US government (and others) should have extracted a greater penalty. In particular, they should have penalized the bondholders. Admittedly this would have caused another mini-shock similar to what happened after Lehman but I think it would have helped in the long run. By not penalizing the bond investors, who were the main financiers of the incompetent and reckless banks, I feel that very little has changed.

I hate to say it but turning the incomptent banks into megabanks, so-called too-big-to-fail, is going to lead to too-big-to-save. The investors, particularly bond investors, who were the key enabler of large leverage, are still back to their old ways. Moral hazard is far larger than it was before the crisis. It doesn't seem that way but let's wait and see. All it takes is for China to enter a recession or for, say, banks in Ireland or Greece to default, and we'll see what happens.

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