The buzz is that value investing has been difficult in recent years, inducing investors to take refuge in other investing styles. It has indeed been so, for underpriced stocks have been hard to find and those that are potentially attractive are priced with a large speculative component. However, value investing is on point in this environment for it informs when stocks are overpriced and identifies speculative growth pricing. And, while identifying stocks to avoid, sound fundamental analysis can point to attractive investments outside the marquee stocks.
The turn to style investing as an alternative to full-blooded value investing is a doubtful remedy. Most of the popular styles have also been unsuccessful in recent years. Indeed, the failure of these pseudo-value investing strategies have given value investing a bad name. Of note is the “value” and “growth” investing styles that have appropriated the language of value investing but which chapter 3 shows is cheap value investing. Chapter 12 goes further by showing that these styles lead you into a trap which only sound fundamental analysis exposes.
And so with investing on firm size that is also dealt with in chapter 12. We could continue with other styles, factor investing, smart beta investing, and more, and might do so in the future.