Value Stocks Trade At A 55% Discount To Expensive Stocks Based On P/B

During the past two weeks, there seems to have been a dramatic increase in the number of financial commentators predicting the return of value stocks  this year.

Value has underperformed growth since the financial crisis and the consensus seems to be that as the economy, and interest rates finally pull out of the post-crisis lull, value will return.

There’s plenty of evidence which shows that value stocks (defined as the companies with the lowest price to book ratios) outperform over the long term. However, since the financial crisis this value premium has disappeared. Value stocks have underperformed growth stocks almost every year since the financial crisis the longest such streak in decades.

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• Bearish Horseman Capital: Italian Banks Could Offer Value

Value stocks have...

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