Valuations, economy may favor value stocks

Vanguard

Kevin DiCiurcio, Olga Lepigina

Research

4 Pages

Vanguard argues that value stocks look notably cheap relative to growth after a long stretch of underperformance. The piece blends valuation work with business cycle analysis and suggests current conditions could favor patient tilts toward value within diversified portfolios.

Date published: August 23, 2023

Key Takeaways

Valuation opportunity: Value stocks trade at depressed multiples relative to growth, creating room for a future return advantage.
Cycle support: Historical data show value has often done better during economic recoveries and soft landing style environments.
Portfolio role: A measured overweight to value may help offset subdued broad market return expectations over the coming decade.
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