Value Investing Is Not Dead
Plus Tariff Chaos and Behavioral Finance Resources
Welcome back, as always each Monday I round up 2-3 recent articles discussing personal finance, and I provide analysis to see if these ideas are worth your time.
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Don’t call it a comeback: The Return of Value Investing
On Friday, Reuters published an article suggesting that value investing, a strategy popularized by Warren Buffett, may be poised to ‘rise from the dead.’
Historically, value investing—buying stocks that appear undervalued based on fundamental analysis—has delivered strong returns. However, in recent years, it has lagged behind growth investing, especially during the tech-driven bull markets. With the underperformance of major growth stocks in early 2025 and normalizing interest rates, value investing may be making a comeback. Experts believe the current landscape offers compelling opportunities for disciplined, fundamental investors.
But here’s the thing, value investing never really died.
Value investing is a component of what is called ‘factor’ investing which focus on different factors that drive risk and return in the stock market. As I covered in my book, The Rational Investor there is a growing body of research that suggests that factor investing works best when you invest in multiple factors.
So, another famous factor in addition to the value premium is the ‘size’ premium, where investing in small rather than large companies provides (in theory) higher risk-adjusted returns.
When you look at ‘value’ or ‘small cap’ stocks you might not be too impressed with recent returns.
But when you look at companies that are both small AND valued appropriately, returns have been stellar.
Take a look at the Avantis ‘Small-Cap value’ ETF (not an endorsement of the fund) return over the past 5-years:
Now compare that to the return of the S&P 500:
Small-cap value stocks up 167% compared to 107% for the S&P 500.
So, no value-investing was never dead—it just turns out the when investing in value ‘size matters.’
Navigating Market Volatility with Behavioral Finance
Last week I read this article from Investment News which discusses how understanding behavioral finance can help investors navigate market volatility.
Now, there is nothing in this article that I found particularly useful.
I really just wanted an excuse to let my newer readers know and remind my long-time readers that I have written dozens of articles on behavioral finance which draws on research from hundreds of academic research papers.
Go check them out in the ‘money on my mind’ series here.
Here’s a few of the most popular articles in that series:
The Impact of Tariffs on Consumer Sentiment
Data recently came out showing U.S. consumer sentiment has declined sharply, dropping to 50.8 in May from 52.2 in April, as reported by the University of Michigan.
This decline is attributed to rising inflation fears driven by the erratic Trump tariff policies.
This is a bit concerning because historically, drops in consumer sentiment are closely linked with economic contraction and drops in the stock market.
The stock market did tank pretty hard in February and March, but has since recovered. So, are investors out of the woods? Impossible to say, because it’s impossible to know what Trump will decide with tariffs or other economic policies.
As I wrote last week, this really is one of the most uncertain investment environments in recent memory—perhaps even more uncertain than during COVID. I know that sounds bonkers to say, but when the financial markets will rise and fall on what Trump will Tweet’s next, it’s hard to imagine a more uncertain scenario.
As I also discussed last week, I am glad to see more and more investors appear to be seeking help from financial advisors. This is the exact kind of moment where professional advice is worth every penny.
This is especially true for anyone nearing retirement or might need money from their portfolio anytime in the next 5-years. If that is you, I’d love to hear how you are coping with this current economic environment, let me know in the comments:
That will do it for this week's newsletter. See you next Monday with 3 fresh personal finance articles.
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This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.