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Financial investor Warren Buffett looks on during an announcement ceremony at Northwestern University in Evanston, Ill., in this file photo taken Jan. 28, 2015.Reuters

Value investing isn't dead. It is, however, comatose and surrounded by grieving relatives.

I know, I know: This is not what most value investors (and I'm one) want to hear. Benjamin Graham showed that you could have made big profits by buying cash-heavy, asset-rich stocks during the Great Depression. Ever since then, value investors have figured they could earn lush returns by loading up on stocks that are cheap in comparison to their earnings and book values. Academic research has largely concurred that value wins.

But is that true lately? Not so much. The Russell 3000 Value Index, which tracks the bargain end of the U.S. stock market, has fallen badly behind its growth index over the past couple of years. Heavy holdings of bank stocks have weighed on the value index, while the growth index has surged on its exposure to hot sectors like technology and pharmaceuticals.

However, it's not just recent market fads that are making bargain-hunting investors feel blue. Jason Hsu, co-founder of Research Affiliates, looked at returns over the past couple of decades from U.S. equity funds that describe themselves as value-oriented. He found they returned an annual average of 9.4% from 1991 to 2013, barely edging out the 9% return produced by the Standard & Poor's 500 Index. At least for fund investors, the extra return from pursuing a value strategy seems to have collapsed to next to nothing.

There are several ways to explain this. One is that interest rates have fallen over the past generation. Easy money helps to fuel growth companies. It also helps to keep even troubled companies afloat, which means one attraction of value stocks—a greater ability to withstand financial stress—might not matter as much as it once did.

Value may also be waning because the market is getting smarter. Back in the 1940s and 1950s, classic value investors like Graham and the young Warren Buffett had to dig painstakingly through financial statements to find businesses that could meet simple but demanding criteria. Now, anyone with a Bloomberg terminal can do similar searches in seconds. Perhaps value has become so easy to find that it no longer generates much in the way of rewards.

Or maybe value's slide reflects a complicated mix of interest rates, market efficiency and crowd psychology. Veteran Financial Times commentator John Authers argues that the best times for value stocks are when the market looks either terrific or terrifying. If the former, value stocks shoot up because everything is on the rise and cheap stocks have the furthest to climb. If the latter, value stocks shine because investors want fortress-like companies with solid balance sheets.

By that logic, the current market is a horrible environment for value, because there's neither euphoria nor panic. In a humdrum market supported by low rates, it's no wonder that value investing is looking so sickly.

It might take a renewed outburst of economic terror for value stocks to once again perform better than the overall market. If that happens, a value portfolio might perform better than other strategies, but still lose money as everything crashes. We value investors should be careful what we wish for.

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