Five reasons why value investing may never regain its appeal
https://www.theglobeandmail.com/investi ... -approach/
I found points 4 and 5 to be rather interesting. Basically, the author is saying that the strategy is becoming a victim of its own success - the more investors who follow the strategy and the better they follow it, the less effective it becomes.There has been a lot of talk about the death of value investing.
The strategy, embraced by Benjamin Graham and Warren Buffett and many followers, has beaten the market over decades going back to the 1930s, but it's hard to ignore how badly it has fallen behind in this recent 10-year period, eclipsed by the high-growth technology sector.
Still, value investors persist. They undoubtedly find support from like-minded investors. It’s human nature to have a set of core beliefs, flock to others who also believe them and to embrace information that supports those beliefs.
For investors, though, there's a danger of succumbing to confirmation bias. It's important to be able to step back and judge an investment strategy objectively, and see the other side of the argument. Here are five arguments why the value strategy might not work as well in the future as it has in the past.