The value premium

The value premium refers to the tendency for stocks considered undervalued—those selling for less than their true worth based on financial fundamentals—to outperform the overall market over time. Investors often buy these "value" stocks expecting the market to recognize their true value eventually, leading to higher returns. This phenomenon suggests that paying attention to company fundamentals, like earnings and assets, can yield better long-term investment results compared to focusing solely on trendy or high-priced stocks. The value premium is a well-documented market behavior that highlights the potential rewards of disciplined, fundamental-based investing.