 Good day, fellow investors. Today we'll discuss how value investing has beaten growth investing in 84 years out of the last 90 years. So value 84 years win, growth investing six years win and of the six years two are now. So I'll take the data from Eugene Fama and Kenneth French, which are the founders, let's say, of the efficient market theory. They say that markets are efficient and that you cannot beat the market by picking individual stocks. But they did that research in the 1970s and then in the 1990s they did new research that showed that if you buy small stocks and value stocks you usually outperform the market. However their explanation was that the risk but they call risk volatility is higher. So who cares about volatility? You only want to know your long-term return and the best long-term returns in the stock market over the last 90 years have been from value stocks that have beaten growth stocks and let me show you the data by how much. So this is a chart that shows 10-year rolling returns. So if I invest now in a value portfolio, which means that I buy 30% of the market that has the lowest price to book value and compare that portfolio with a portfolio that has 30% of the market with the highest price to book value. It is expected that growth stocks have high price to book values and value stocks have very low price to book values. So if we go back to the chart from 1927 by doing that by buying value stocks you would have underperformed growth stocks only in six years. 1929 and 1930, if you bought stocks in 1999 and if you bought stocks of course in 2004, 2005 and 2006. So just six times since 1927 value investing would have underperformed growth investing in the last 90 years. Now your question might be why then isn't everybody a value investor? Well value investor is boring. You have to find a stock that's cheap, not exciting, not in a huge growth market like Amazon or Alibaba or NVIDIA or something company that you look for companies that have stable earnings, good basic good fundamentals and then you buy them and then you wait and then you sit and then you look at your return slowly, slowly, boringly going up. So you might think okay it's again better to buy growth stocks because they go up like this. Yes they go up very quickly but they go down even faster. If you just take a look at the Nasdaq chart from 1990s till now you can see huge spikes but also huge downturns. The problem is that when recession comes, when the irrationality of investors overpaying for the exciting growth evaporates then the growth stocks crash. Lower stock prices disable new capital rises which then lead to a lot of bankruptcies and very very bad returns. So in a growth cycle of course investing growth stocks but if you want long term low risk then you should invest in value stocks. Remember Warren Buffet's main quote about investing. First don't lose money, second don't lose money. By buying value, by buying stocks with a low price to book value you can really outperform the whole market. If you buy small stocks even better but that's for another video. So on average a market value portfolio has beaten a market growth portfolio over the next 10 years during the 90 years of data and by the way this data is from Kenneth French and Eugene Fama Nobel Prize winner. So it's not my data, it's their data and those are the efficient market guys. Nevertheless the average market value portfolio has beaten a market growth portfolio over the next 10 years is 4.6 per year. 4.6 per year is a huge difference and let me show you how big of a difference is that. So if the market average is let's say 8% which is the historical average then a growth portfolio would return 5.7% and a value portfolio would return 10.3%. On a 100,000 portfolio over just 10 years the difference is 92% or almost 100% of the initial portfolio. 100,000 5.7% per year is 174,000 10.3% is 266,000. Now that's okay but let me show you how you can even more improve value investing because value investing from a perspective that Fama and French took is just buying the cheapest stock and I don't agree with that because there are sectors that are bad sectors and the stock might be cheap but it can go even cheaper and then it will go bankrupt. Warren Buffett's greatest mistake and this might sound very funny if you don't know the story was Berkshire It was a textile mill in a declining industry with competition coming from cheap production in Asia they could not survive so he bought the company he put in a lot of capital to try to save it but he put in more capital that the company actually returned to him and they closed down operations in 1980s so even Buffett uses to say that Berkshire was his biggest investing mistake fortunately for him in the meantime he bought many other things that exploded but Berkshire was a declining cheap value bargain which is not the way to go so there are many cheap stocks now in declining sectors that won't do good so you have to do yourself a favor and find value stocks in growth sectors if you invest in the oil industry retail or something else that is getting disrupted I would I would be very very wary about long-term returns even if there is value keep watching this channel as we constantly look for value margin of safety investments in great sectors great countries thank you for watching I'll see you in the next video