By J. E WOODS and J. M YOUNG.
27 February 2001
Financial Times
From Mr J. E. Woods and Mr J. M. Young.
Sir, Peter Chambers ("The folly of value investing", February 21) argues that investors should target companies with high growth potential rather than those with low stock valuations. His piece is notable for the absence of any empirical support for his assertions.
In an article in the Financial Analysts Journal (July/August 2000), Profs Chan, Karceski and Lakonishok showed that, in the US over the period 1970-98, it was value, not so-called growth, stocks that achieved the higher rates of return, the higher rates of earnings growth and the higher rates of dividend growth.
The title of their article was "New Paradigm or Same Old Hype in Equity Investing?"
J. E. Woods, Managing Director, J. M. Young, Associate, John Woods & Associates, 25 Western Road, Sutton SM1 2TE, UK.
