Value vs Growth

Hanauer: Value spread as tailwind and headwind for performance

Matthias Hanauer

“The value spread (valuation difference between value and growth stocks) can serve as either a tailwind or headwind for value factor performance, similar to how overall market valuation multiples affect broad market returns. Even if the current elevated value spread doesn't normalize to historical averages, the structural value premium from factors like dividend yield and the migration of cheap stocks should persist. Understanding the value spread is more helpful for explaining what has happened historically than for predicting future performance.”

Damodaran: Value premium has faded in recent decades

Aswath Damodaran

“While value stocks (low P/E, low price-to-book) historically outperformed growth stocks for most of the last century, this premium has largely disappeared over the past 30 years. The last decade saw growth stocks significantly outperform value stocks, driven primarily by big tech companies. The simple strategy of buying low P/E stocks and expecting mean reversion no longer works because it's too obvious and easily replicated by everyone, including AI systems.”

Arnott: Value's underperformance was due to valuation compression, not fundamentals

Rob Arnott

“Value stocks underperformed by 38% from 2007 to 2020, but became three times cheaper relative to growth stocks during this period (from a 3:1 to 9:1 valuation spread). The entire drawdown was attributable to value investing falling out of favor and getting cheaper, not due to struggling fundamentals of value companies. If relative valuations had remained constant, value would have actually outperformed, demonstrating that the 'value effect' remained alive throughout this period.”

Finck: Traditional value vs growth definitions and Marathon's approach

Clay Finck

“Value investors traditionally focus on companies with low valuation multiples (PE, price-to-book, etc.) associated with Benjamin Graham's approach to unloved stocks, while growth managers invest in companies with high multiples and high growth rates at the opposite end of the spectrum. Marathon Asset Management, though often labeled as value investors, maintains below-average multiples not because they seek "cigar butts" but because they're searching for the best value by comparing estimated worth to market price.”

Hanauer: Value underperformance 2018-2020 was within-sector, not sector allocation

Matthias Hanauer

“The value factor underperformance from 2018 to 2020 differed from the dot-com bubble period in that expensive stocks outperformed cheap stocks within each sector, rather than being driven by sector effects like technology and telecom outperformance. Using region and sector neutralization in factor construction helps isolate this within-sector stock selection effect from broader sector allocation effects.”

Finding Hidden Investment Winners w/ Jon Cukierwar (TIP726)

Jon Cukierwar

“…ve fairly high valuations if you look at sort of enterprise value to Ebidas or pees or whatever not because they're growing fast but because they have high returns on capital and I think there's a big misconception that a company's valuation multiple PE or ent”

The Nvidia Way w/ Tae Kim | Jensen Huang, The Future of AI, & DeepSeek (TIP704)

Tae Kim

“…back in 2007 gross stocks were three times as expensive as value somewhere at 2020 it had widened to nine times that means value had gotten threefold cheaper in the space of those 13 years relative to growth stocks that spread of 9 to1 was actually wider than”

Hermès Stock Deep Dive | The World's Most Prestigious Luxury Brand w/ Shree Viswanathan (TIP659)

Shree Viswanathan

“value since that seems to just be such an important aspect of Aires say 10 years down the line you would expect you know the growth to be higher than say the GDP growth rate for example absolutely yeah this is uh and then again luxury as a business is one wher”

The Way to Win w/ Bill Nygren (RWH058)

Bill Nygren

“…early in my career we talked about like a three-year growth value cycle then it got to five. Uh the idea that value would be out of favor for a decade is something that was never something we envisioned back in the 80s or 90s. But when you look at why it's bee”

First Principles of Valuation w/ Tim Koller, Partner at McKinsey & Company (TIP725)

Tim Koller

“…ve fairly high valuations if you look at sort of enterprise value to ibidas or pees or whatever not because they're growing fast but because they have high returns on capital and I think there's a big misconception that a company's valuation multiple PE or ent”

Mastering Focus Investing | Warren Buffett's Strategy w/ Kyle Grieve (TIP678)

Kyle Grieve

“…nt to discuss here is the never-ending debate on growth and value Charlie Munger has one of the best quotes of this subject that I've ever read the whole concept of dividing it up into value and growth strikes me as twaddle it's convenient for a bunch of pensi”

How Heico's Stock Compounded by 22% Since 1990 | The Mendelson Way of Business (TIP738)

Clay Finck

“…ut it's really about focusing on extracting the appropriate value commensurate with the types of parts they're producing. For every part, Transdime is maniacally focused on earning an appropriate economic return. So as older planes are retired and production r”

Zero to One by Peter Thiel | Why Competition is for Losers (TIP786)

Clay Finck

“…ion in profit. But when Twitter went public in 2013, it was valued at $24 billion, which was 12 times the value of the New York Times. You might assume that Twitter was perhaps even more profitable than the Times given the huge valuation disparity, but the rea”