The Lost Decade for Value

The Lost Decade for Value


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by Eddy Elfenbein, Crossing Wall Street

It’s a well-known fact that value stocks have, over the long-term, outperformed the overall stock market. But how long is long-term?

As it turns out, it can be pretty long.

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We’re coming up on ten years of value underperforming. The last value cycle peaked on August 8, 2006. (I’m using the Russell 3000 Value and Russell 3000 indexes.)

A lot of the reason value has done so poorly is due to the financial crisis. Many banks get classified as value, and so many have been blown out of the water.

According to the chart, value led from November 1980 to August 1998. Then it lagged until December 1991. There was a brief value surge until September 1993. After that, value trailed the long bull market until March 9, 2000.

Maybe the cycle has already turned? Value hit a recent low on January 25, 2016 and has been outperforming (a little) ever since.

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