Is Value Investing Irrelevant Now?

I have always believed in value investing. I prefer to stay away from short-term speculation and market fads. Being a speculator or trader is a personal strategy, and I respect the investment every investor makes. There is no right way to invest. Some people do well with short-term trading; others focus on growth, while some remain committed to value investing. Each strategy has its strengths and weaknesses. Yet, I wonder if I am missing out on some opportunities by being loyal to value investing? Has my preference for companies limited my potential returns?

The argument against value investing usually goes like this: some stocks become expensive. Keep going up, making people who wait for good value look old-fashioned. For example, Tesla, an American electric car-making company, has a high stock price compared to its earnings even though the company is not making as much money as it used to. SpaceX did an IPO and raised about $75 billion with a valuation of $2.03 trillion, and then its market value went up to nearly $2.4 trillion. The company had a net loss of 4.94 billion in 2025. These prices are hard to understand using ways of looking at companies. They are based on what people think will happen in the future.

This makes me ask the question: Is value investing irrelevant?

To answer this question, let’s look at another US company, Nvidia. Some people say Nvidia is an example of how fundamentals do not matter. A year ago, Nvidia's stock price was really high, and many people thought it was too expensive. Now, the company is making a lot more money, and the price does not seem so high anymore. Nvidia did not prove that value investing is wrong. Instead, it showed that strong companies can justify prices if they do well. The company's earnings caught up with its stock price. Kept growing.

The lesson is simple. Value and growth are not opposites. Growth is a part of value. The hard part is figuring out which companies can really deliver on their promises and which ones are just popular with investors. Nvidia delivered. It is not clear if all the expensive companies today can do the same. People like to buy stocks with stories behind them. Artificial intelligence, autonomous vehicles, space exploration, and robotics are exciting. Can capture people’s imagination. A spreadsheet with numbers cannot compete with these stories. Often people buy the story first. Then try to justify the price later.

When stock prices go up, more people want to buy, which makes the price go up more. For investors, a stock's strong performance becomes a reason to invest. People do not want to miss out, so they invest, even if the price is high. When some investors make a lot of money, others think the market must know something they do not. History shows that every big bubble has some truth to it. Railways changed the way people travel. The internet changed commerce and communication. Artificial intelligence is changing industries today. The innovation is real, which makes it easier to justify prices.

The problem is not always the business itself. The problem is often the price. A stock can become so expensive that even if the company does everything perfectly, the price is still too high. When expectations become unrealistic, great businesses can become bad investments. The ideal way to determine whether value investing is still relevant is to observe what value investors are doing. Berkshire Hathaway started 2026 with a record amount of cash around  $400 billion. At the time, the overall market was still expensive. This does not indicate that value investing is irrelevant. It means that it is very hard to find the best deals or need to search for diamonds in the dust. When opportunities are scarce, being patient becomes a strategy. Renowned Value investors like Seth Klarman, Howard Marks, Mohnish Pabrai, and Li Lu have followed this approach and created massive wealth for themselves. They all believe that the price you pay for an investment determines how well it will do in the future. Charlie Munger has said that investors should focus on buying businesses at fair prices rather than just buying cheap stocks.

Some people say that markets are too efficient for value investing to work. Information is available instantly. Everyone has access to the same data. The real advantage was never just about having information. The real advantage is having the temperament. Markets are good at looking at facts. Stock markets are not the place to deal with emotions. Human biases such as fear, greed, impatience, and overconfidence lead people to make wrong decisions. Value investing is not irrelevant. What is gone is the way of value investing that only looked at low prices without considering the quality of the business or its potential for growth. Modern value investing is about understanding what a company is worth, being careful, and waiting for opportunities.

Some of the companies today will eventually grow into their prices, just like Nvidia did. Others will not meet the expectations that are built into their stock prices. History shows that both outcomes are possible. The only uncertain thing is when it will happen, and timing was never the important thing in value investing. The goal of value investing is simple: buy something for less than it's worth and give time the chance to work in your favour.

Article By: Rajesh Adhikari (Auckland, New Zealand)