Goldman Sachs has just put out a new report which essentially declares the world of value investing dead. The approach was pioneered by Eugene Fama and Ken French and adopted by Warren Buffett. However, the new Goldman report shows that over the last decade, such an approach produced a loss of 15%. Over the same period the S&P 500 has nearly doubled. Goldman says the factors which held back the strategy are abating, but that in the near term value investing’s returns are likely to remain subdued, primarily due to the late stage of the economic cycle.
FINSUM: Given the lopsided and slow nature of the recovery, it does make sense that value investing has suffered as it usually benefits from broad-based growth.