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September 16, 2023 at 12:00 p.m.

by Christopher A. Hopkins

Two generations of investors came of age under a rubric known as value investing. Put simply, the concept involves identifying securities that are currently selling for less than their fair or intrinsic value due to some misperception by market participants. The approach has a certain inherent logical appeal with the added benefit of having worked for most of the time between the 1970s and 2007.

Value investing may be broadly contrasted with an alternative perspective that seeks to identify companies that are expensive now but can expand rapidly to eventually justify a higher price. This perspective, generally called growth investing, has vastly outperformed value over the past 16 years with only brief exceptions. This prolonged reversal begs the question: Is value investing an anachronism, or should we perhaps reconsider how we apply it?

Although the term wasn't yet in use, the concept of value investing traces to the pioneering academic work of Benjamin Graham and David Dodd at Columbia University in the aftermath of the Great Depression.

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Value investing: Out of favor or out of time? - Chattanooga Times Free Press