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The Viability of the Value Premium Part V: What Matters in the End


I appreciate your following our five-part series on value investing. If you’ve made it this far, your journey is nearly complete. 

So far, we’ve offered a number of evidence-based reasons we remain confident that the value premium is far more likely slumbering than dead. Unfortunately, nobody can predict when it will awaken, or whether it will do so gradually or in a rush. We can’t even offer an iron-clad guarantee we’re correct. 

For better or worse, this is the nature of market risks and their expected rewards. Suffice it to say, the market’s inherent uncertainties challenge the most disciplined investors. Even the late, great Vanguard founder John Bogleonce said about his own, roughly 50/50 stock/bond mix: 

“I spend about half of my time wondering why I have so much in stocks, and about half wondering why I have so little.”

So, if you have your doubts, that’s perfectly understandable. But before you actually change your investment strategies or abandon value investing, consider this 1999 sentimentfrom The Journal of Portfolio Management’sfounding editor Peter Bernstein. His words are as relevant today as when he wrote them 20 years ago:

“Even the most brilliant of mathematical geniuses will never be able to tell us what the future holds. In the end, what matters is the quality of our decisions in the face of uncertainty.”

What still makes for quality decisions? Global diversificationis a huge part of it. By spreading your risks across multiple sources of expected returns, you can better manage the very real risks involved in pursuing them. In the frightening face of uncertainty, patient resolve and objective evidence are also among your greatest guides. Last but not least, we’re here to help as well. Questions? Comments? Time for a talk? Let us know! 

Jeff Griswold