So Where’s the Value Premium?

One of the cornerstones of finance is that value stocks are supposed to outperform the overall market over the long haul. But value stocks have had a terrible time over the last five years. Much of this is due to the rotten performance of financial stocks, which tend to crowd the value indexes.

Bear in mind, I’m not talking about overall performance, but I’m lowering the bar to just beating the market — and value stocks have failed.

Here’s a look at the Vanguard Value Index Fund (VIVAX) divided by the Vanguard 500 Index Fund (VFINX). If you bought the Value Fund at any time since December 2003 and held on, you would have lost to the broader S&P 500 Index fund.

In the last few weeks, there’s been a minor rebound for value, but we’re quickly losing it. We may establish a new relative performance low in the next few days.

Posted by on May 24th, 2012 at 1:16 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.