Value Investing Performance Varies Depending on Measure

If you gauge value investing by evaluating “a portfolio that buys cheap stocks based on price-to-book ratios,” it hasn’t done too well over the past decade, according to a recent article in The Wall Street Journal written by Wes Gray, CEO and CIO of Alpha Architect, a quantitative asset manager based near Philadelphia.   The article offers the example in which a “generic portfolio of the cheapest stocks (labeled ‘Generic Value (P/B)’ based on price-book ratios earned a compound annual total return of 2.44%, compared with the S&P 500’s total return of 7.10%.” It explains, however, that price-to-book is only one […]