Vitaliy Katsenelson’s Contrarian Edge: Growth-stock investors can gloat over value investors — for now

According to many market commentators, value investing doesn’t work the way it used to. Some even tout statistics that growth-stock strategies have outperformed value over the past decade. How do you rebut that view?

There are two answers to this question. My first answer is within the bounds of your “growth” and “value” constructs, where you take a valuation metric, let’s say price-to-earnings, and divide the market into two halves — the top, expensive half, defined as “growth” stocks, and the bottom (cheap) half, the “value” stocks. That’s an arbitrary and crude way to look at it, but this is what research services do to make this growth-vs.

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