Yes, and value stocks outperform growth stocks over long enough periods of time too. But what does that have to do with the market not being efficient?
The academic explanation for why small cap and value outperform large cap and growth is that small cap and value companies are riskier investments. The factor risk premiums exist because investors need a higher return to reward them taking on more risk.
Risk premiums actually support the existence of an efficient market.
Yes, and value stocks outperform growth stocks over long enough periods of time too. But what does that have to do with the market not being efficient?
The academic explanation for why small cap and value outperform large cap and growth is that small cap and value companies are riskier investments. The factor risk premiums exist because investors need a higher return to reward them taking on more risk.
Risk premiums actually support the existence of an efficient market.
Additional reading:
- https://faculty.chicagobooth.edu/john.cochrane/research/pape...
- https://www.investopedia.com/ask/answers/022715/are-small-ca...
- https://www.investopedia.com/terms/v/valuestock.asp