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Empowered Investor: A Guide to Building Better
Portfolios by Keith Matthews
Price $15.95>> 
 Improve
your Portfolio: Think Value
Value Stocks Outperform Growth Stocks
What is value investing? There are many terms thrown around to describe
this style of investing, such as contrarian investing, value investing
and bargain hunting. They all allude to the fact that this investment
approach seeks to find out of favour, neglected, forgotten, distressed,
beaten-down, cheap, and therefore good-value investments.
The Fama/French landmark study entitled “The Cross Section
of Expected Stock Returns,” released in 1992, reported that
two classes of stocks have tended to do better than the market as
a whole: (1) small caps (to be discussed in Chapter 9) and (2) stocks
with a high book-value-to-price ratio (customarily called “value”
stocks; their opposites are called “growth” stocks).
These academic researchers confirmed what many market participants
had been stating for years: that “value” stocks outperform
not only the broad market, but also “growth” stocks.
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