Which style of investing has performed best – 22 years

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Not sure about the data (refer chart above) but it looks counterintuitive to me when I look at Value investing vs Momentum or Junk based investing chart. Value Investing has given worst returns? If Morgan Stanley’s data is correct then why do we have legends of Value Investing Like Buffett, Seth Klarman (to name a few) generating a consistent return of 18-25% CAGR over the same period.

It’s a classic case in a bull market when the sell side starts pushing Junk and Momentum based ideas and products and prove it somehow why their thesis is correct. Sell-side analyst understands it very well that an investor would definitely assign a sizeable amount of his time in understanding long-term trends to draw comfort in taking a final call. Fooling around with data can cause huge variations in the final outcome and you can tweak it based on what you want to prove. The conclusion is derived first and then the backward working is done to justify the conclusion.

I have learned this lesson while spending few years of my life at Sell Side 🙂


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