Why value stocks struggle during technological revolutions

History shows that value stocks always struggle during technological shifts. But when’s the turnaround?

Apple CEO Steve Jobs © David Paul Morris/Getty Images

Apple: the face of the tech revolution
(Image credit: Apple CEO Steve Jobs © David Paul Morris/Getty Images)

"Is value investing dead?" We've heard this plaintive cry many a time during the past decade, as growth stocks (flashy, expensive stocks) have trounced value stocks (dull, cheap ones). Several reasons have been proposed for this performance gap, from the idea that interest rates have hit a permanently lower plateau, to the theory that the nature of "book value" (see below) has changed as intangible assets such as "intellectual property" and "network effects" become more important than tangible assets such as factories. Now we have an interesting new take to add to the mix that it's all down to revolutions.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.