Value Investing Outperformed Growth Over Past 35 Years: Goldman - Hedge Fund Alpha (formerly ValueWalk Premium)
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Value Investing Outperformed Growth Over Past 35 Years: Goldman

A combination of overconfidence, cognitive biases, and intense competition means that most active stock pickers underperform the market, usually by a fair margin. But research from Goldman Sachs analysts Stuart Kaiser, David J. Kostin, Amanda Sneider, and Ben Snider shows that a focus on growth stocks instead of value investing is also an important factor. Value investing strategies ‘consistently generated strong returns’ “Focusing on trailing EPS growth does produce modestly positive annualized returns of 120 bp and incorporating growth cycles incrementally improves performance,” they write in a June 16 report. “By contrast, passive stock-picking based on Valuation has consistently generated...

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