What is the value premium, and why has value investing lagged growth recently?

The value premium is the historical tendency of cheap, out-of-favor stocks to outperform expensive growth stocks over long periods, documented by researchers like Fama and French. For much of the 2010s and into the 2020s, however, value badly trailed growth as a handful of large technology companies drove market returns. This long dry spell tested the patience of value investors and led some to question whether the premium still exists. History shows factor premiums come and go in multi-year cycles, and value has staged strong comebacks before. The lesson is that betting on any single style requires a very long horizon and the discipline to hold through painful stretches. If that uncertainty bothers you, a total-market fund owns both value and growth.