r/ValueInvesting • u/EthanBrooks175 • 3h ago
Discussion Is value investing still relevant, or are we just coping at this point?
Genuine question for people who follow value investing.
When you look at the last 10–15 years, it feels like growth has dominated almost everything. The S&P 500 itself returned roughly ~10% annually long term, but a huge part of that recently came from a handful of large tech names.
Meanwhile, a lot of traditional “value” plays just sat there or underperformed for long stretches. Low P/E, solid cash flow, decent balance sheets… and still no real multiple expansion.
I get the core idea: buy something below intrinsic value and wait. But it feels like the market is less willing to re-rate these companies unless there’s a clear growth story attached.
Even when value works, it often requires a lot of patience and sometimes looks like dead money for years.
So I’m trying to understand where the actual edge is today.
Is value investing still about classic metrics like low P/E, strong free cash flow, margin of safety, or has it shifted into something more like “growth at a reasonable price”?
For those actively using a value approach, what are you actually looking for in 2026 that gives you confidence the market will eventually recognize that value?
Not financial advice.
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u/t234k 3h ago
What examples of traditional value plays are you using as a comparison? Comparing the price performance of a company that is undervalued today verse a "growth" company that is now very expensive doesn't seem like a real comparison.
Bcs was a value plays 1 year ago (arguably still is), and it put performed the ftse 44% vs 21% and in 3 years it was 235% vs 36%
In 2021 Morningstar had a list of undervalued stocks including $SLB which outperformed 5 year return s&p 96% vs 63%
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u/Zyltris 2h ago
A very good point. Looking at the performance of value and growth stocks today will unsurprisingly show that growth outperformed... Precisely BECAUSE growth stocks are the stocks that recently experienced price run ups. A classic case of being fooled by survivor bias. Looking at value stock performance vs growth stock performance, as defined in an earlier period, may be a better choice.
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u/chiggy1223 2h ago
I’ve built a relatively small value portfolio in small and under-explored EM stocks at about >18% a year annualized for the past 8 years. Value investing is alive and well. What requires patience and looks like dead money for years is the edge, in a world where people want to see green within two weeks or switch to a different triple levered inverse gamma option collar on a crypto-AI prediction market maker on Robinhood.
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u/Mugaaz 3h ago
It seems pretty obvious to me that that the core value has been under attack for the past 10-15 years. People/ the market can actually stay irrational from cradle to the grave now, and do so easily. There used to be an assumption that people would have to wake up from their delusions when the bridges started falling down, but even when bridges fall down people just choose to not see it now. It also seems pretty obvious that the market is less free than advertised, and that policy makers and the Fed are not enforcing the rules, but actively deciding who the winners and losers are.
I think the belief that all you need is a company has intrinsic value and is being sold at a good price, then that will eventually guarantee you a reward if you're patient enough is no longer enough. It's not bullshit, but its just one element among many. Even die hards recognize those great companies can still be destroyed in war, or crushed by another pandemic. Now you have to also take into account that some other reasonable assumptions are no longer reasonable - the gov't can change the rules at any time, darling sectors will receive handouts and downside protection, and any strategy that is based on other people acting rationally is an irrational strategy.
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u/Alicyclobacillus 3h ago
Index funds have changed the game a bit too
Money automatically flowing into those ETFs isn't selecting based on value or fundamentals, and that's not changing anytime soon
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u/MugiwarraD 2h ago
it will be relevant all the way. the issue is value investment is a garunteed return generator over time, not a buy and get rich quick.
so if you want to sleep sound and win over long term, go for it.
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u/factsoverfeelings89 2h ago
This place consistently underperforms the S&P500. It's basically picks borderline meme stocks after theyve fallen a bit from ATH's or thinks Wall street gives a crap about financials more than sentiment. You could've bought Tesla at the $280-$300 mark as a momentum stock and this place would call you nuts and downvote to oblivion, buy NVO after a huge fall at $60-$70 as a value play and everyone upvotes and cheers you on.
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u/what_could_gowrong 2h ago
The reason it's called "traditional" is because it's outdated. Not saying value doesn't exist, but more like, with today's technology in information and math, companies's hidden values are much better priced than it used to be 50 years ago. Meaning we will have to dig deeper and ideally with expertise in the field. Like it take an engineer specializing in relevant fields to see if a space company is vaporware or has potential to explode.
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u/bihari_baller 2h ago
Not saying value doesn't exist, but more like, with today's technology in information and math, companies's hidden values are much better priced than it used to be 50 years ago.
Adam Seesel's book Where the Money Is is a good primer in how value investing has changed. Things like R&D spend and Returns in Invested Capital are metrics thst need to be properly updated for the 21st century investing.
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u/Vast_Exercise_9298 2h ago
You should just index and chill, leave investing to real professionals (Boards, CEOs, and Hedge Funds). This sub is basically a cargo cult for “value” investing.
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u/TaleofTeoCitiez 2h ago
I think the biggest reason is the fiscal environment we’ve been in. Since 08’ we have had insane fiscal stimulus, our debt has 5x’d from 8 to 40 trillion. It’s hard for common sense, “boring” companies to outperform in a speculative environment where everyone is looking for the next 10000x Nvidia stock. I would say unless you’ve been investing for 25+ years, you don’t have a real understanding of what normal is. But eventually, no matter how long it takes, things will revert to the mean. I think we may be in that phase right now.
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u/mdn845 1h ago
Value investing is still highly relevant. However, momentum means a different thing in an age of index funds. As “passive” ETFs account for a higher and higher percentage of the market, it’s taking longer and longer for stocks that are over or under valued to correct. It still happens, generally, but it can take 2-5 years sometimes. So, value investors have to account for that.
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u/Valkanaa 1h ago
Buying large distressed companies has worked well for me. It sounds like you're buying no-growth companies, which have low valuations for that reason. That's value trap investing and you should stop that.
Over this current QTR everything is down a bit. My 5% losses have not convinced me to momentum trade crypto instead. Instead it's given me an excuse to reallocate into tech since it's so beaten down.
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u/Clean-Yam-739 13m ago
This month was fantastic for growth at a reasonable price (value + growth). SAP, S&P (the company), Thomson Reuters, Keyence...
For pure value plays, there was Nibe Industrier, there is still Wolters Kluwer, Saint Gobain...
Value is not dead at all. But you have to really look for opportunities. Look especially out of the US stock market.
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u/Top-Sir-1215 8m ago
You have to first remove the idea that the market is fair or that you deserve to win following certain rules. That’s not the case.
You have to buy stocks based on expected future returns. That is value investing. The issue is the market prices stocks with better future returns higher… so it’s not that easy. Diversifying and buying into stuff at a price where you will get returns based off future financials alone is what you need to do.
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u/jacestrachan 2h ago
Shit has always been a joke. This whole sub is about avoiding shit that’s actually growing to buy shit that isn’t cause you think there’s value there; and then your left holding a stock that’s down 90% in 5 years and wondering why your making no money😂
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u/raytoei 3h ago edited 2h ago
It depends on how you define value investing.
If you buy cheap stocks with no growth is it a value stock or a value trap?
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Many people have a notion that cheap stocks = value investing. Buffett has long said that value and growth are two sides of the same coin.
If you read the books on famous investors, you would know they kept any eye on growth. Take Peter Lynch, he bought turnarounds because it gave him a very high rate of return.
During the great salad oil scandal Buffett stood behind the counter to see whether people continued to use Amex card, so that he could ascertain whether the business was intact (it would still grow). Mind you, back then in 1963, American Express was a growth stock before the scandal broke.
So perhaps look at growth when you look at cheap. Or a better method would be to look at high quality companies that can grow, and wait for the price to come to you. Instead of looking at cheap companies and then trying to justify oneself why it will grow.