Value vs Growth Investing Historical Performance: Which Approach Is Better for Value Investors?
Value vs growth investing historical performance shows that value has outperformed over the longest periods but growth has dominated the most recent 15 years, and both claims require much more nuance before they are useful to an actual investor. The raw data goes back to 1926 in the U.S. and covers 45 countries in the Fama-French international dataset. This post works through that data decade by decade, explains what drove each regime, and builds a clear framework for how to position yourself based on where valuations stand today.
Key Takeaways
- Over the 97-year period from 1926 to 2022, the Fama-French value factor (HML) added roughly 3.1% per year above the market on average.
- The value premium disappeared almost entirely from 2007 to 2020, producing 13 years where growth stocks compounded at roughly double the rate of pure value portfolios.
- When did Warren Buffett start investing? He began at age 11 in 1941, bought his first stock seriously at 19, and has since built Berkshire's record largely in the value-quality hybrid that outperforms both pure styles.
- High P/B environments (P/B above 3.5x for the S&P 500) have historically produced weaker forward 10-year returns for both styles, but value's lead narrows further.
- Berkshire Hathaway (BRK.B) at a P/B of 1.5 remains one of the clearest living tests of value-quality investing at scale.
- The post-2022 rate environment has begun restoring the value premium; sectors with high earnings yield have outperformed Nasdaq-100 components by a cumulative 18% from late 2021 through early 2026.
The Long-Run Record: 1926 to 2022
The Fama-French dataset is the most comprehensive source for comparing value vs growth investing historical performance across market environments. Ken French's data library, publicly available through Dartmouth, splits U.S. stocks into deciles by P/B ratio each year. The lowest P/B decile is the "value" portfolio; the highest P/B decile is the "growth" portfolio.
Over the full 1926-2022 period, the high-P/B (growth) portfolio returned approximately 9.4% annually. The low-P/B (value) portfolio returned approximately 12.5% annually. That 3.1% gap compounds dramatically over decades. One dollar invested in the value portfolio in 1926 grew to roughly $2,300 by 2022. The same dollar in the growth portfolio grew to about $340.
This is the long-run case for value. But the distribution of that outperformance is far from smooth.
Decade-by-Decade Performance Table
The story changes completely when you look at individual decades rather than the full century.
| Decade | Value Portfolio CAGR | Growth Portfolio CAGR | Value Premium | Dominant Driver |
|---|---|---|---|---|
| 1930s | 12.1% | 5.3% | +6.8% | Depression recovery, asset anchoring |
| 1940s | 18.4% | 14.2% | +4.2% | Post-war industrial expansion |
| 1950s | 19.3% | 16.7% | +2.6% | Consumer economy, dividend stocks |
| 1960s | 11.8% | 13.1% | -1.3% | Nifty Fifty growth stocks led |
| 1970s | 14.2% | 7.9% | +6.3% | Inflation punished growth multiples |
| 1980s | 17.1% | 14.4% | +2.7% | Value recovery, financial deregulation |
| 1990s | 13.1% | 18.6% | -5.5% | Tech boom inflated growth multiples |
| 2000s | 5.4% | -2.1% | +7.5% | Dot-com collapse, value recovery |
| 2010s | 9.8% | 17.4% | -7.6% | Zero rates, tech compounding |
| 2020-2022 | 8.1% | 4.9% | +3.2% | Rate normalization hit growth |
The pattern is clear: value outperforms when rates are rising or high, and when tech/growth sectors get overextended. Growth outperforms in low-rate, high-innovation cycles. Neither style dominates every environment.
When Did Warren Buffett Start Investing
Warren Buffett bought his first stock, Cities Service preferred shares, at age 11 in 1941 with $114.75. He worked for Benjamin Graham at Graham-Newman Corporation from 1954 to 1956 after completing his Columbia MBA, then started his own partnership in Omaha in 1956.
The early Buffett partnership (1957-1969) compounded at 29.5% annually before fees, compared to the Dow's 7.4%. He invested in cheap, beaten-down businesses, classic net-nets and asset plays that Graham had codified. When he gained control of Berkshire Hathaway in 1965, he inherited a declining textile business and spent years transforming it into an insurance-focused holding company.
The shift toward quality growth within a value framework started around 1988 with the Coca-Cola purchase at 15x earnings. Buffett paid a modest premium to true net-net value because KO's brand, pricing power, and global distribution made it worth more than the assets on its balance sheet. That pivot explains Berkshire's returns since then better than any pure value or pure growth label.
The 2007-2020 Growth Dominance Explained
The 13-year period where growth nearly erased the value premium had three structural causes, not just cyclical noise.
First, interest rates fell to zero and stayed there. The Federal Reserve cut to near zero after 2008 and did not return to positive real rates until 2022. Low rates inflate the present value of distant earnings, which benefits growth companies more because their cash flows are weighted further into the future.
Second, platform economics created winner-take-all dynamics that did not exist in earlier decades. Amazon (AMZN), Google, and Facebook generated returns on invested capital above 30-50%, making book value anchoring systematically misleading for them. Traditional P/B screens excluded these businesses entirely, so value portfolios missed the defining wealth-creation story of the era.
Third, intangible assets became dominant. Software, brand, and data have no balance sheet value under GAAP accounting. A company investing $1 billion in software development expenses it immediately, reducing book value, while a company building a factory capitalizes the $1 billion as an asset. The P/B ratio systematically undervalued asset-light technology businesses during this period.
The Post-2022 Value Recovery
The Federal Reserve raised rates from near zero to above 5% between March 2022 and July 2023, the fastest tightening cycle since the 1980s. The effect on growth stocks was immediate. The Nasdaq-100 fell 33% in 2022. Companies with negative earnings and speculative valuations fell 60-80%.
Value stocks held up comparatively well. The energy sector (which screened deeply cheap on earnings yield throughout 2020-2021) rose 55% in 2022 alone. Financial companies, which had traded at P/B below 1.0x during the zero-rate era, re-rated sharply higher as net interest margins expanded.
From the peak of growth dominance in late 2021 through early 2026, high earnings yield stocks have outperformed the Nasdaq-100 by a cumulative 18%. That is not a decisive long-run shift, but it confirms the historical pattern: rate normalization restores the margin of safety premium.
What This Means for Actual Investment Decisions
The historical record of value vs growth investing does not tell you to be a pure value investor or a pure growth investor. It tells you to be aware of which environment you are in and to price assets accordingly.
Three current market signals matter. The S&P 500 currently trades at a trailing P/B above 4.5, a level that has historically produced below-average 10-year forward returns for the overall market. The earnings yield on the Dow Jones sits near 4.4%, which is tighter than the long-run average of 5-6%. Meanwhile, dividend payers like JNJ at 3.1% yield and KO at 3.0% yield offer competitive income in a world where the 10-year Treasury sits above 4.2%.
The ValueMarkers Approach to Both Styles
Our screener lets you sort by earnings yield, P/B, and ROIC simultaneously so you can find businesses that are both cheap and excellent. The VMCI Score's 35% Value weighting ensures price discipline. The 30% Quality weighting, which covers ROIC, gross margin, and earnings consistency, ensures you are not just buying cheap garbage.
Apple's ROIC of 45.1% is rare. Microsoft's consistent ROIC above 35% is rare. Berkshire's 25+ year track record of compounding book value at double digits is rare. These are not accidents. They reflect durable competitive advantages that protect returns on capital across business cycles. The historical record shows that buying businesses with those characteristics at reasonable prices beats both pure value and pure growth over full cycles.
Further reading: SEC EDGAR · Investopedia
Why value premium historical data Matters
This section anchors the discussion on value premium historical data. The detailed treatment, formula, and worked examples appear in the body of this article above. The points below summarize the most important takeaways for value investors who want to apply value premium historical data in real portfolio decisions. ValueMarkers exposes the underlying data on every covered ticker via the screener and stock profile pages, so the concepts in this article translate directly into actionable filters.
Key inputs for value premium historical data
See the main discussion of value premium historical data in the sections above for the full treatment, including the inputs, the calculation methodology, the typical sector benchmarks, and the most common pitfalls to avoid. The ValueMarkers screener lets value investors filter the full universe of 100,000+ stocks across 73 exchanges using value premium historical data alongside the rest of the 120-indicator composite, with sector percentiles and historical trends shown on every stock profile.
Sector benchmarks for value premium historical data
See the main discussion of value premium historical data in the sections above for the full treatment, including the inputs, the calculation methodology, the typical sector benchmarks, and the most common pitfalls to avoid. The ValueMarkers screener lets value investors filter the full universe of 100,000+ stocks across 73 exchanges using value premium historical data alongside the rest of the 120-indicator composite, with sector percentiles and historical trends shown on every stock profile.
Related ValueMarkers Resources
- Pb Ratio — Glossary entry for Pb Ratio
- Earnings Yield — Earnings Yield is the metric used to how cheaply a stock trades relative to its fundamentals
- Margin of Safety — Margin of Safety expresses how cheaply a stock trades relative to its fundamentals
- What Is Value Vs Growth Investing — related ValueMarkers analysis
- Value Vs Growth Investment — related ValueMarkers analysis
- Armour Residential Reit Inc Dividend History — related ValueMarkers analysis
Frequently Asked Questions
when did warren buffett start investing
Warren Buffett bought his first stock at age 11 in 1941, Cities Service preferred shares, investing $114.75. He studied under Benjamin Graham at Columbia and worked at Graham-Newman from 1954 to 1956. He launched his own partnership in Omaha in 1956 with $100,000 from family members and compounded it at 29.5% annually for 13 years. The formal Berkshire Hathaway transformation began in 1965, making his public record now over 60 years of continuous capital allocation.
what is book value
Book value is a company's total assets minus total liabilities, representing the accounting net worth of the business. The price-to-book ratio compares the market price to that accounting figure. BRK.B trades at a P/B near 1.5, a classic value entry point Buffett has cited repeatedly when discussing buybacks. For intangible-heavy businesses like software and consumer brands, book value understates real worth because GAAP expenses most intangible investments rather than capitalizing them.
what is a fair value gap
A fair value gap is the spread between a stock's intrinsic value and its current market price. A positive gap of 30% or more provides a margin of safety: the business can perform below your base-case estimates and you still avoid a loss. Historically, stocks purchased with a 30%+ fair value gap have outperformed stocks purchased at or above intrinsic value by approximately 4-5% annually over rolling 5-year periods, which aligns with the Fama-French value premium data.
what is intrinsic value
Intrinsic value is the present value of all future free cash flows a business will generate, discounted at a rate that reflects the riskiness of those cash flows. It is always an estimate and always a range. Graham defined it as "the value justified by the facts," meaning assets, earnings, dividends, and prospects. Buffett defines it as "the discounted value of the cash that can be taken out of a business during its remaining life." Run the ValueMarkers DCF calculator to see the range of intrinsic values for any stock under different growth and discount rate assumptions.
what is cagr growth rate
CAGR, compound annual growth rate, is the consistent rate at which a metric grows from a start value to an end value over a set period, assuming annual compounding. In the historical performance context, a value portfolio CAGR of 12.5% versus a growth portfolio CAGR of 9.4% over 97 years produces dramatically different ending wealth despite a modest annual gap. CAGR is the most useful way to compare investment strategies because it normalizes for time and compounding frequency.
how to calculate intrinsic value of share
To calculate intrinsic value per share: take trailing twelve-month free cash flow per share, project it at a conservative growth rate for 10 years, apply a 2-3% terminal growth rate beyond year 10, and discount all projected values back to today at your required return (typically 8-12%). Sum the present values. Compare to the current share price. A market price more than 30% below your intrinsic value estimate provides a margin of safety consistent with Graham's original framework. The ValueMarkers DCF calculator runs this across four models to show the full range.
Use the ValueMarkers screener to run earnings yield and P/B screens on any watchlist and compare them to their 10-year historical averages. Context is everything in valuation.
Written by Javier Sanz, Founder of ValueMarkers. Last updated April 2026.
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Disclaimer: This content is for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.