This is an efficient market view and it is supported by well-known academics Eugene Fama and Ken French, creators of the Fama-French Three Factor Model.
Gene Fama and Ken French popularized this methodology for investors during the 1990s by introducing the Fama-French Three-Factor Model.
Fama and French do not believe the excess return from value investing is not without consequence.
This model expands on the Fama-French Three-Factor Model by adding a stock momentum risk factor.
One way to employ a value tilt in a portfolio is to use the Fama-French Three Factor Model.
The small-cap premium is eloquently deconstructed by the Fama-French Three Factor Model.
Warren Buffet loves them, Mario Gabelli loves them, Seth Klarman loves them and ardent followers of the Fama-French Three Factor Model are infatuated with them.
In 1992, Eugene Fama and Ken French outlined the importance of analyzing multiple risk factors when attempting to explain portfolio performance.
Mr Fama and Mr French find no evidence that companies stop paying dividends (or do not start) because they can buy back shares instead.
Famed academics Gene Fama and Ken French enjoy the stability of book value and this leads them to high book-to-market companies (high BtM).
Subsequent research by Gene Fama and Ken French demonstrated that tilting a portfolio toward small companies and value (distressed) companies offers the opportunity for increased returns over the global market.
This finding is confirmed by 30 years of research, ranging from "behaviorists" such as Robert Shiller and Richard Thaler to "efficient marketers" such as Eugene Fama and Ken French, to "economists" such as John Campbell and myself.
To give two high-profile examples, Ibbotson and Associates and the academic duo of Eugene Fama and Kenneth French did similar studies that found that value stocks, as measured by low price-to-book ratios, outperform growth stocks over the long run.
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