After understanding the difference between momentum investing and strategic investment, investment funds may opt for strategies known as value investing and growth investing. Here you will learn the difference between the two and, as a result, will be able to form a broader picture about the different investment strategies. How do you choose the best investment strategy?
The initial hypothesis, to be tested in this article, is that there is no outperformance of value stocks over growth stocks. This is basically in line with the market efficiency hypothesis that suggest that for long periods of time investors should not be able to consistently outperform. It will be shown later in this article that this underlying assumption is rejected for long periods of time (the entire time series of 17 years) but not for the majority of individual calendar years.