Finding hidden treasure: value investing is back in fashion

Focusing on cheap stocks, historically a highly successful investment strategy, has been a disappointment over the past ten years. But the tide is starting to turn, says Matthew Partridge.

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MoneyWeek has long been a big fan of value investing, the strategy of buying "bargain" companies trading at relatively low multiples of earnings, cash flow or book value (net assets). This is because historical evidence suggests that in the long run these types of shares tend to beat the wider market. For example, Elroy Dimson, Mike Staunton and Paul Marsh of the London Business School have done research for Credit Suisse showing that equities with low price/book value (p/b) ratios have beaten the market by an average of around 3% a year in the US between 1928 and 2018 and nearly 4% a year in the UK between 1955 and 2018.

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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri