Fama and French argue that argue that value strategies outperform growth strategies because the former are riskier. In their view, efficient markets simply deliver the higher returns than riskier strategies are supposed to. Lakonishok, Shleifer, and Vishny (1994) argue that value strategies yield higher returns because they exploit the suboptimal behavior of investors. In their view, inefficient markets underprice out-of-favor (value) stocks and therefore, investing in them does eventually pay off.
[munger]
While the academics can’t seem to decide on the science behind why value outperforms, the numbers don’t lie. In almost all of the studies conducted on the subject, value strategies have outperformed growth:
