Cooper says in both the academic literature and plain old logic, value stocks' going up in recessionary times is counterintuitive. The answer is no. They do better. You can look at them as being undervalued, especially compared to their high-flying technology and communication brethren, because the value stocks are closer to bankruptcy. But given macroeconomic forces such as a credit crunch or a drop in consumer spending, value stocks tend to bounce up.
Cooper runs the numbers.
In expansionary periods, value stocks gain an average of 0.37 percent per month relative to growth stocks. But in contractionary periods, they gain 0.85 percent per month relative to growth stocks. Rau says a very practical reason to hold value stocks is that people get laid off in recessions. There are simple and subtle indicators when the markets are making transitions from expansionary to recessionary investment environments. Still, the experts counsel the way to play the market is to buy and hold.