You don't have to look far to find someone mourning the death of value investing; it dominates headlines in investing circles.
It seems, the obituary goes, that the growth indexes have handily beaten the value indexes over the past few years… and, why, you'd have to have rocks in your head to use value investing techniques.
Nevermind that it's crazy to use an index to track the value investors' performance. This approach is all about using rigorous quantitative or fundamental research techniques – or some combination of the two – to uncover opportunities that the market has overlooked.
By definition, there just are not that many opportunities (or good ones, at any rate) except at market extremes. There sure as hell are not anywhere near the – good grief – 2,000 or so stocks that FTSE Russell uses to form its value index.
Value investors hunt with a rifle, not a shotgun.
I'll be blunt: That argument against value investing may well be the dumbest argument of all time. And if you buy into it, it's costing you money.
About the Author
Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of "Max Wealth" and Heatseekers.