Earlier this week, we began discussing some of the more pervasive and enduring facts and fictions surrounding the value premium. But it’s important to understand that the value premium—a phenomenon in which securities that sell at low prices relative to fundamental metrics outperform on average securities that sell at high relative prices—is an empirical fact.
As I mentioned previously, the premium’s existence is evident in 87 years of U.S. equity data, in more than 30 years of out-of-sample evidence from the original studies, in 40 other countries and in other asset classes (bonds, commodities and currencies).
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