Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Value Versus Growth Flashback: Microsoft Corporation (MSFT), Wal-Mart Stores, Inc. (WMT) Were High-Flying Growth Stocks?

Jack and I were reading a classic academic paper on value investing the other day: Contrarian Investment Extrapolation and Risk.

In this paper Lakonishok, Schleifer and Vishny–the 3 compadres that went on to form the behemoth investment firm LSV asset management–highlight an “obvious” empirical finding for all value investors out there.

The authors find that value stocks earn excess returns because investors over-extrapolate bad news and drive cheap stocks beyond fundamental value.



Jack and I update and expand the LSV results in our work “Analyzing Valuation Measures: A Performance Horse-Race Over the Past 40 Years”.

Our conclusion is no different than LSV–value kicks B–Double O–T–Y.


We all know value has worked historically. That isn’t new, but re-reading the old classics can be fun. For example, below is some text from page 1575 of the LSV text:


Wal-Mart Stores, Inc. (NYSE:WMT) and Microsoft Corporation (NASDAQ:MSFT) were expensive high-flying growth stocks in the early 90′s. Ironically enough, Microsoft Corporation (NASDAQ:MSFT) and Wal-Mart Stores, Inc. (NYSE:WMT) are now “value stocks” that nobody wants to own.

Microsoft Corporation (NASDAQ:MSFT) shows up as #3 on our quantitative value screen this month and Wal-Mart Stores, Inc. (NYSE:WMT) is not too far down the list!!!




Who is rearing to buy Microsoft Corporation (NASDAQ:MSFT) and Wal-Mart Stores, Inc. (NYSE:WMT) today?

Wesley R. Gray, Ph.D.Better known as “The Turnkey Analyst, Ph.D.”, Executive Managing Member, Empiritrage, LLC, Assistant Professor of Finance, Drexel University’s LeBow College of Business, United States Marine Corps, Captain, Ground Intelligence Officer, Published author; featured speaker, author, and lecturer at numerous venues (top-tier universities, museums, radio, and television), Ph.D./M.B.A. Finance, University of Chicago Booth School of Business, B.S. The Wharton School, University of Pennsylvania, magna cum laude Wes’ homepage is at

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.