https://www.msci.com/documents/1296102/1339060/Factor+Factsheets+Value.pdf https://www.msci.com/documents/1296102/1339060/Factor+Factsh... "The foundation of v

https://www.msci.com/documents/1296102/1339060/Factor+Factsheets+Value.pdf https://www.msci.com/documents/1296102/1339060/Factor+Factsh... "The foundation of value investing is the notion that cheaply priced stocks outperform pricier stocks in the long term." "Value has several dimensions: the stock price as a multiple of company earnings, price as a multiple of dividends paid, price as a multiple of book value, and other such “ratio descriptors.” The idea is that investors in aggregate are too optimistic about the stocks with positive outlook (everybody wants them, they get overvalued) and too pesimistic about the stocks with negative outlook (nobody wants them, they get undervalued). In principle, by investing on the stocks that are currently "cheap" (and undervalued in average) you get better returns as they won't do (in average) as bad as discounted by their stock price. What I described above is the "value factor" (used to classify stocks in the value/growth axis). You can also do "value investing" looking at the fundamentals for a company and making sure that that particular company is undervalued. The factor approach is a systematic way to do that without a detailed analysis for each company: you try to identify the measures that allow you to capture undervalued stocks in average.