Value Investing: Circle of Competence in the Consumer Product and Service Industries
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Abstract
This research studies value investing comparing to the returns of Stock Exchange of Thailand and growth investing. The data is from the consumer product and service industries, which has lower return and higher return than the Stock Exchange of Thailand respectively. From July 2008 to June 2018, it found that the returns of both industries using value and growth strategy, yield higher returns than the stock exchange. However, value portfolio performs better than the growth portfolio using P/B ratio. In contrast, using P/E ratio, growth portfolio performs better than value portfolio in the service industry, but the difference is not significant in the consumer product industry. When applying Sharpe ratio, it found that the value investing has higher investment return than the growth investing. Portfolio of lower P/BV ratio created has highest returns than the other portfolios. CAPM model and the Fama and French 3 factor model, cannot explain the relationship between the investment returns of portfolios and the risk factors.
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