End the myth! On value investing's incompatibility with Austrian economics

Abstract

International audienceThe failure of mainstream strategies in the recent financial crisis, allied with the success of value investors like Warren Buffett, has meant the value investing strategy has recently attracted an extraordinary volume of attention. Several Austrian economists have focused on value investing and unanimously adjudged it to be a useful strategy, and one that is aligned with Austrian economics. Unfortunately, the scope of previous research is limited to identifying the main common ground between value investing and Austrian economics, particularly the crucial distinction between value and price, whereas potential discrepancies have not yet been revealed. In order to investigate whether value investing is indeed friend or foe to Austrian economics, it is crucial to analyze how these discrepancies potentially affect the compatibility of the two concepts