Value Premium

The value premium refers to the tendency of investments in "value stocks"—companies that appear undervalued relative to their earnings or assets—to deliver higher returns over the long term compared to "growth stocks," which are valued based on their expected future growth. Essentially, investors who buy undervalued companies often do better financially over time, as the market eventually recognizes their true worth and prices them accordingly. This phenomenon suggests that focusing on undervalued stocks can be a profitable investment strategy, although it involves weighing potential risks and market timing considerations.