Financial Guide: Value Investing In The Past Ten Years Is Worse Than Desirable Performance.

Value investing has been the hottest word in investment circles, and Buffett, known as "stock god", has earned a lot of money through value investing, and value investment has been highly praised.

However, Goldman Sachs said in a recent research report that value investment is dead.

Goldman Sachs reported that from 1940 to 2007, the value factor created by Eugene Fama and Kenneth resulted in an annual average return of 5%.

During this period, the simplest strategy is to buy stocks with the lowest valuation and sell the most valued stocks. In 10 years, 7 years were positive returns, and there was no record of three consecutive years below the highest level.

Over the past ten years, things have begun to reverse.

According to Goldman Sachs, the value factor has accumulated 15% loss over the past ten years, and the 6 year income of the strategy has declined in the past 10 years.

In the same period, the S & P 500 index almost doubled.

The value investment has been less than satisfactory in the past ten years, which has made Goldman Sachs question: "value investment is dead"? Why did value investment have been so bad in the past ten years? Goldman Sachs analyzed two main reasons, first of all, value investment is actually a cyclical factor.

When the economy is generally expanding, value investment will usually outperform the big market. When the economic background is weak and growth is weak, value investment will usually be weaker than big market.

When the economy is generally weak, people always like to invest in some relatively high growth rates.

In the past 10 years, the hurricane of FANG technology stocks is the best example.

The weak performance of value investing in the past 10 years can be attributed largely to the slow pace since the financial crisis.

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Goldman Sachs analysis, "the emergence of stagflation allows investors to allocate more capital to growth stocks with higher growth rate, so growth stocks will outperform the market, and the price is the performance of value stocks or weaker than the big market."

Loose monetary policy is also a major factor leading to weak performance of value stocks.

Goldman Sachs said that after the financial crisis, the water price of all the assets has increased with the big water letting by the central mama, and the price earnings ratio of value stocks has also been increasing, which makes value stocks look less expensive.

In the past ten years, the P / E ratio of S & P 500 has been decreasing, which is a good illustration of this.

After the general election in 2016, the market's expectations for infrastructure development to boost economic growth generally increased. However, if the economy really rebounded to a state conducive to the growth of value stocks, we still need to wait.

The capital of the leading market has enough patience and means to let investors enter the main N trap.

Take the current market as an example, many people can not see the trend of the current steadily rising rebound. They have doubts and wait-and-see attitude towards the market rebound. They are afraid of buying and making small profits to run.

At present, holding stocks to hold up is the key to making money.

The hot spot has been fully activated, the market will be far more than most people imagine: not only the 3300 point will be won, even the high point of the last round of stock disaster will be taken.

The super market index will take the lead in finishing this task, but the biggest opportunity to make money now is the growth of middle and small businesses.

But Goldman pointed out that in the long run, value investing still exists.

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In the long run, value stocks actually gamble on the psychological defects of investors.

In the long history, investors always like to overestimate growth factors, which makes the value effect continue to a certain extent.

As hedge fund giant Icahn once said, some people get rich by learning AI, and I earn money by learning human stupidity.

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