This is why value stocks
outperform glamour stocks in the long run.
Lakonishok, Shleifer, and Vishny found that value stocks tended to
outperform glamour stocks by wide margins, but their earlier research did not include the glamour - driven markets of the late 1990s and early 2000s.
Those with low prices relative to each of these variables often
outperform glamour stocks.
The trio found that, for each of these value / glamour criteria, value stocks
outperformed glamour stocks by wide margins.
Those two papers found that value stocks (defined as the lowest decile of stocks by price - to - book)
outperformed glamour stocks (and by a wide margin).
Not exact matches
As we discussed yesterday in Testing the performance of price - to - book value, various studies, including Roger Ibbotson's Decile Portfolios of the New York
Stock Exchange, 1967 — 1984 (1986), Werner F.M. DeBondt and Richard H. Thaler's Further Evidence on Investor Overreaction and
Stock Market Seasonality (1987), Josef Lakonishok, Andrei Shleifer, and Robert Vishny Contrarian Investment, Extrapolation and Risk (1994) and The Brandes Institute's Value vs
Glamour: A Global Phenomenon (2008) all conclude that lower price - to - book value
stocks tend to
outperform higher price - to - book value
stocks, and at lower risk.
As the various studies we have discussed recently demonstrate — Roger Ibbotson's Decile Portfolios of the New York
Stock Exchange, 1967 — 1984 (1986), Werner F.M. DeBondt and Richard H. Thaler's Further Evidence on Investor Overreaction and
Stock Market Seasonality (1987), Josef Lakonishok, Andrei Shleifer, and Robert Vishny Contrarian Investment, Extrapolation and Risk (1994) and The Brandes Institute's Value vs
Glamour: A Global Phenomenon (2008)-- low price - to - book value
stocks outperform higher priced
stocks and the market in general.
-LSB-...] Robert Vishny Contrarian Investment, Extrapolation and Risk (1994) and The Brandes Institute's Value vs
Glamour: A Global Phenomenon (2008)-- low price - to - book value
stocks outperform higher priced
stocks and the market in general.
Statistically inexpensive «value»
stocks have on average
outperformed statistically expensive «
glamour»
stocks across the board over the long - term