Jasmine Birtles
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Is Value Investing Dead? A Fresh Look for Today’s Investor
Ruby Layram
20th Oct 2025
Value investing is an investing strategy that was made popular by the infamous Warren Buffet. It involves using thorough fundamental analysis and buying stocks when they are significantly below their intrinsic value. The idea behind the strategy is that, if the market has mispriced a stock, it will eventually rise to it’s true value.
Despite the strategies proven track record and previous popularity, many investors have been questioning weather value investing is ‘dead’ in today’s growth-oriented market.
So, is value investing dead? And if so, what is the best investing strategy to follow as an investor?
What is Value Investing?
Value investing is the art and discipline of buying shares in companies that appear to be trading below their “true” worth- in other words, paying less than a company’s intrinsic value, and therefore building in a ‘margin of safety’.
Key components of the strategy include:
- Estimating a company’s intrinsic value based on fundamental analysis (looking at assets, earnings, cash flow) rather than speculation.
- Buying when the market price falls significantly below that intrinsic value (the margin of safety).
- Holding patiently, refraining from chasing ‘hype’, and focusing on the long term.
In short: value investing says don’t pay full price. Appearances matter less than fundamentals.
How to Do Value Investing (in Practice)
If you want to give value investing a real chance, here’s a simple process:
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Screen for undervalued companies: Look for businesses with low price-to-book (P/B), low price-earnings (P/E) relative to peers, strong free cash flow, manageable debt.
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Estimate intrinsic value: Use discounted cash flow (DCF), examine asset value, or compare against historical peers.
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Apply a margin of safety: Only buy when you believe the share price offers a comfortable cushion below intrinsic value.
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Qualitative check: Consider management quality, business model durability, competitive advantage.
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Hold and monitor: You don’t just buy and forget, revisit your thesis if fundamentals change.
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Be aware of value traps: Cheap doesn’t always mean good. Some companies are cheap for valid fundamental reasons.
Also read: How to research stocks
Is Value Investing Dead?
There’s a lot of talk recently about value investing falling out of favour. Here are key reasons:
- Growth stocks (especially tech) dominated returns over the last decade, out-pacing value by a wide margin.
- Classic metrics used for value (like price-to-book) may be less effective today because many companies’ value lies in intangible assets (brands, software, network effects), rather than tangible book value.
- The rise of passive investing, index funds and factor ETFs means many value stocks are less ignored or mis-priced than in the past.
- Some research suggests long stretches where value investing under-performs happen and may persist.
So yes, value investing has had a rough patch. That has led many to question whether it still works.
Why It Isn’t Dead, and Why It Could Still Work…
Even after under-performance, history shows that value investing eventually tends to correct (price always moves back up!). For example, one analysis suggests value stocks have out-returned growth by ~2.5% annually over very long time frames.
When valuations for growth stocks are stretched and rates or inflation rise, value stocks often reclaim their appeal.
The very changes that challenge classic value metrics (intangible assets, software) may open new “value” opportunities if you update your lens (for example free-cash-flow yield instead of price-to-book).
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Why it Might Not Be For You…
Although Value Investing has it’s fanbase, its not for everyone! Here are a few things to consider before you jump on board.
- Value investing can require more patience. Some investors may get discouraged during long stretches of under-performance.
- Identifying “true value” is harder in a world where business models and assets are increasingly intangible- your analysis must evolve.
- Timing matters: entering value too early or without quality can lead to losses or prolonged waiting.
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Value Investing isn’t ‘Dead’. It’s Evolved
If I were to give you a verdict, it would be: Value investing is not dead. But it is not the same as it was 20 years ago.
It demands adaptation, patience and perhaps an updated framework.
For example: Instead of simply looking for companies with low book value, I’d focus more on how much cash the business actually generates, how efficiently it uses its capital, and whether its business model is strong and sustainable.
In a market where growth stocks have already delivered large gains and appear richly valued, value investing might actually be a contrarian strategy, but only if you still adhere to the fundamentals and remain flexible.
Next Steps
Here are a few key takeaways that will help you to move forwards in a way that is informed.
- Don’t abandon value investing purely because it’s been “out of favour.”
- If you still like it, update your framework: use metrics and business models that fit today’s economy.
- Keep valuations modest. Even “value” stocks can be expensive in absolute terms.
- Balance your portfolio: value ideas don’t have to be the whole portfolio, but they can be a meaningful tilt.
- Be ready to hold through the waiting period. Value tends to pay off in the long run, but not always in short bursts.
- Consider blending value + quality: “high-quality value” can reduce some of the risks of classic low-price value.
Final Thoughts
So, is value investing dead? No. It’s just gone through a tough patch and will likely require modernisation. If you stick to the principles, buying wisely, at a discount, with a margin of safety, while adapting to the modern business world, value investing remains a viable tool in your wealth-building arsenal.
The key is to be patient, be selective, and don’t blindly chase “cheapness.” Support your investment decisions with updated metrics, maintain a margin of safety, and hold for the long term.
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*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.
Disclaimer: Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you should not expect to be protected if something goes wrong.
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