The theoretical support for value investing is
longstanding—paying a lower price means a higher
expected return. However, realized returns are volatile.
A 10-year negative premium, while not expected, is
But history also tells us that changing course after
a disappointing spell for known premiums can lead
to missed opportunities. When those drivers of
outperformance have turned around in the past,
steadfast investors have been rewarded. A key to
successful long-term investing is sticking with your
approach, even through difficult periods, so that
you are there for the good times too.