A recent MarketWatch article outlines some reasons why investors are abandoning value investing, and offers insights on why they shouldn’t.

“The long-term case for value stocks is easy to make,” the article argues, noting that from 1928 through 2019, large-cap U.S. value stocks reflects a compound annual return of 11.8% versus 9.9% for the S&P 500 index.

The article offers the following reasons why investors bail on value:

• Not enough time. The value premium doesn’t emerge in a predictable way, it explains, with the strategy known to suffer long periods of underperformance. “Long term investors could benefit from those periods,” the article notes, “but short-termers could have easily missed them.”
• Not enough patience. “Being patient isn’t as easy as it might seem. The powers-that-be on Wall Street always have a new and better solution for any investor who’s frustrated, nervous or tired of waiting for results.”
• Not enough good luck. Even those with sufficient time and patience, the article asserts, may face a run of bad luck. “If you had jumped on the small-cap-and-value bandwagon in the mid-70s or in 2001, your payoff would have been immediate, perhaps making you a believer for life. Good luck.”
• Not enough good sense. The article contends that even for investors that have time, patience and good luck, active investing can “easily derail a lot of good investment choices.” A more sensible choice for capturing the long-term benefits of value investing, it says, is a four-part portfolio that “includes the most basic U.S. equity asset classes: large-cap blend stocks (the S&P 500, in other words), large-cap value stocks, small-cap blend stocks, and small-cap value stocks,” noting that this combination has outperformed the S&P 500 in six of the past nine decades.