PT  - JOURNAL ARTICLE
AU  - Benoit Bellone
AU  - Raul Leote de Carvalho
TI  - Value versus Glamour Stocks: The Return of Irrational Exuberance?
AID  - 10.3905/joi.2021.1.199
DP  - 2022 Jan 31
TA  - The Journal of Investing
PG  - 75--93
VI  - 31
IP  - 2
4099  - https://pm-research.com/content/31/2/75.short
4100  - https://pm-research.com/content/31/2/75.full
AB  - Value stocks have endured a period of severe underperformance until recently. This article shows that the value spreads between valuations of value stocks and their most expensive peers expanded in all regions and sectors during this period of underperformance, reaching the same extreme high levels last seen at the peak of the tech bubble in 2000. Investors have rerated expensive stocks relative to their value peers, thus reflecting an expanding difference in their respective earnings growth forecasts. There are signs this trend may now have changed. Value spreads may have started a new period of compression at the end of 2020, led by shrinking differences in earnings growth forecasts. A compression in value spreads would be favorable for value stocks, small-capitalization stocks, and multifactor strategies.