Since 1926, if you were to rank stocks by their price-to-book ratio those with low ratios (value stocks) have outperformed those with high ratios (growth stocks) by an average of 4.8% per year.

Does this always work? Absolutely not. Value stocks have underperformed since the Great Recession…mostly because financials are classified as value stocks…even though their book values aren’t
necessarily accurate.

If you go back to Benjamin Graham…the pioneer of value investing…he suggested that financials be excluded from the equation in determining undervalued companies.

It’s important to remember that all anomalies…all investment strategies…will be in-favor and out-of-favor at different times. The key is to stick with a strategy and remain disciplined.


About the Author:

Mark Tepper, CFP

Mark Tepper is President and CEO of Strategic Wealth Partners. While he works with a variety of clients, Mark specializes in the wealth management and financial planning needs of entrepreneurs. Since entering the financial services arena in 2000, Mark has gone on to become a Million Dollar Round Table Top of the Table qualifier, placing him in the top 0.1% of financial advisors in the country. A well-known financial commentator, he appears regularly on CNBC’s Street Signs and Closing Bell, as well as FOX Business. Additionally, he is the author of Walk Away Wealthy - The Entrepreneur's Exit-Planning Playbook, and Exceptional Wealth. Beyond that, he has been featured in numerous publications, including The Wall Street Journal, Kiplinger’s, and CNN Money.

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