Unlocking the Secret: Why Value Stocks Outperform Growth Stocks
The article explores why value stocks perform better than growth stocks in finance. By categorizing stocks into switching- and fixed-style, researchers found that the difference in returns is due to how often portfolios are rebalanced. Switching-style stocks show a value premium, while fixed-style stocks show a growth premium. This suggests that investors may not process information accurately, leading to extreme expectations about future growth.