Small Value Investing

One of the striking trends in the stock market during the past many decades has been the outstanding performance of Small Value stocks. This performance has been studied and exploited by professors Gene Fama of the University of Chicago and Ken French of Dartmouth. You can use this calculator to run their data, but it just takes a quick summary to tell the story:


Annualized Inflation-Adjusted Returns, 1927-2005
Total Stock Market: 6.72%
Small Value: 12.13%


With numbers like these you can see why Small Value funds have been attracting attention - and money.

This article explores the Small Value advantage, suggesting possible reasons why it happens and comparing different methodologies used by different Small Value indexes. It ends with a caveat: Small Value may not be the best value all the time.


Article Contents
Small Value Intro
Why Small Value?
Which Small Value?
Checking Significance
Checking Valuations
Books & Links

Article Contents
Index Funds Article


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