Value Investing Rebounds After Predictable Cycles

Cornell study finds value stocks follow cyclical patterns of outperforming and underperforming growth stocks

Published on Mar. 5, 2026

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A new study from the Cornell SC Johnson College of Business examines nearly five decades of market data and finds that the decline of value investing appears more cyclical than permanent. The researchers introduce a new metric called the implied value premium (IVP) that can forecast the swings between value and growth stocks with surprising accuracy, showing value investing is still an attractive strategy despite recent struggles.

Why it matters

This research is important because many investors have questioned whether value investing is still a viable strategy after value stocks lagged growth stocks dramatically after 2007. The study shows these recent troubles are simply part of a recurring cycle, providing hope for value investors and insights into navigating market shifts.

The details

The paper, "Is the Value Premium Dead? Forecasting Value-Growth Cycles with the Implied Value Premium," published in the Journal of Financial and Quantitative Analysis, finds that the IVP proved to be the strongest predictor of whether value stocks would later outperform growth stocks, beating every commonly used forecasting tool. Looking back to 1927, the researchers show that value and growth stocks have repeatedly taken turns outperforming each other, with value cycles typically lasting 5-7 years and growth cycles running 2-3 years. The period after the 2008 financial crisis created an unusually long stretch favoring growth.

  • The study examines nearly five decades of market data from 1977 to 2023.
  • The paper was published on February 4, 2026.

The players

David Ng

Professor in the Charles H. Dyson School of Applied Economics and Management at Cornell University and co-author of the study.

Yan Li

Professor at Temple University and co-author of the study.

Bhaskaran Swaminathan

CEO of Compassion AI and co-author of the study.

Cornell SC Johnson College of Business

The institution where the research was conducted.

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What they’re saying

“Traditional tools used to measure whether value looks cheap, such as price‑to‑book ratios, have become less reliable in an economy dominated by intangible assets like software, branding and research spending. These older measures don't capture the earnings power of companies whose value lies outside traditional accounting categories.”

— David Ng, Professor (Cornell SC Johnson College of Business)

What’s next

The researchers plan to continue studying the cyclical patterns of value and growth investing to help investors better navigate market shifts.

The takeaway

This study provides hope for value investors and insights into the cyclical nature of value and growth investing, showing that value investing is not dead but rather follows predictable cycles of outperformance and underperformance relative to growth stocks.