Value Investing Facts And Fiction
Value is the phenomenon in which securities that sell at low prices relative to fundamental metrics (such as earnings, book value, cash flow, dividends and sales) on average outperform securities that sell at high relative prices. Specifically, the value premium is the annual average return realized by going long cheap assets and short expensive ones.
The existence of a persistent and pervasive value premium is well-established, empirical fact evident in 87 years of U.S. equity data, in more than 30 years of out-of-sample evidence from the original studies on the factor, in data from about 40 other countries and in other asset classes (bonds, commodities and currencies).
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