There has been a lot of ink consumed in recent months in the popular press and online arguing that value investing is dead.
While academicians do not know which stocks from the value group value investors will eventually buy, they do know that value investors mostly choose stocks from the lowest P/E group and avoid stocks from the highest P/E group. ETFs only roughly adhere to this rule. Having said that, however, even buying from the low P/E group of stocks is not true for all value investors. The deep value Ben Graham-style value investors do, but the Buffett-like investors do not necessarily. But let’s leave this discussion for another time and focus on what most of this discussion has revolved around, namely, the Ben Graham-style value investing.Returning to the ETF comparisons: Value ETFs do not meet the value requirements for either value investors or academics.