Content courtesy of Dimensional Fund Advisors. Gerard O’Reilly is of no relation, just a wonderful and common Irish name. See notices at the end of the very brief video.
Recent value returns paint a very different picture from returns just a few years ago. In a webcast, Co-CEO and CIO Gerard O'Reilly puts value's recent performance in context and underscores the importance of investor discipline.
One Minute Video:
To put this into perspective: You may recall reading from us many times. We take advantage of a statistically proven performance advantage of value stocks outperforming growth stocks. It does not mean that we do not buy growth stocks. It means we slightly underweight growth stocks and slightly overweight value stocks. We remain highly diversified.
At the same time, we inform you that this advantage, just like any stock market comparison you might make, goes in and out of favor. We use the word “persistent”. The advantage is there most of the time, but can go out of favor before it comes roaring back. The timing and pattern cannot be predicted. As it turns out, we just went through those swings and when growth was in favor, you could have been tempted to veer from the strategy - then value came roaring back. Had you not had discipline, you would have missed that swing back. This is, of course, similar to having discipline to stay in the market when it is down, as any “slice” of the stock market, or the market in its entirety, when it is down, will inevitably come back.