Over long periods of time, value stocks deliver more return than growth stocks. This value premium is well documented in academic research papers. Below are two examples.
- Value Versus Growth: The International Evidence, August 1997, Fama and French.
- The Long-Term Price-Earnings Ratio, May 2005, Anderson and Brooks.
This does not mean that an investor can simply buy 10 or 15 value stocks and sleep soundly expecting a low-risk and high return. Value investing carries some unique risks. One problem is that value stocks tend to fall harder in bear markets than growth stocks. This article will discuss 4 simple methods that any investor can use to lessen the impact of a potential fall.
But first, we will examine our value ranking engine to understand how we select value stocks.
Value Ranking System
Our value ranking engine will be compliments of Portfolio123.
The ranking system scores all stocks in
