Value Stocks Are Hot—But Most Investors Will Burn Out – By Jason Zweig
Money and Finance

Value Stocks Are Hot—But Most Investors Will Burn Out – By Jason Zweig


"Most people aren't cut out for value investing, because human nature shrinks from pain," the money manager Jean-Marie Eveillard told me this past week. His words are a reminder that making money on cheap stocks—the goal of every value investor—is harder than it sounds and can take years to play out.

Lately, value investing has seemed easy. Over the past year, the Russell 1000 Value Index, a yardstick of cheap stocks with sluggish expected earnings, is up 19%, compared with 11% for pricier "growth" stocks and 15% for the full Russell 1000 index of big U.S. stocks. The public has started to notice: Mutual funds specializing in large value stocks took in $2.4 billion in January.

But as Mr. Eveillard warns, the long-term rewards don't go to people who think value investing is easy. Superior returns can be earned only by those who know that it is hard—and stay put.





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