Every now and then, a fad comes along that sweeps investors up in a whirlwind of hope and greed. In the early 1970s, it was the "Nifty Fifty" craze. At the start of the 1980s, investors piled into biotech stocks. By the late 1990s, highflying Internet stocks were the latest Wall Street darlings. Investors like to dream about huge returns, and they don't mind taking on a lot of risk to get them. But next time you get caught up in the next big thing, consider this: Value stocks have repeatedly outperformed growth stocks over the long haul. When analysts talk about value stocks, they're generally referring to securities that are cheap relative to their fundamentals. These are often more mature companies that have fallen out of favor with investors yet pay a dividend and have a have low price-to-earnings ratio. Growth stocks, on the other hand, tend to be pricier and more popular because earnings and revenue are growing at a rapid pace. In recent weeks, investors have shifted money out of growth stocks, which performed extremely well last year, and into some of the overlooked value stocks. Whether or not this trend will continue isn't clear, given the paucity of inexpensive issues currently trading on U.S. markets. But studies show that the rotation makes sense from a long-term perspective. Finance professors Lewis Chan and Josef Lakonishok recently compared the performance of value and growth stocks using data from 1979 (when returns on the Russell indices became available) through the end of 2002. They found that the Russell 1000 value index posted an annualized return of 13.93%, compared with 11.84% for the Russell 1000 Growth index. The evidence for small-cap value stocks is even more compelling. The Russell 2000 value index saw an annualized return of 14.74% compared with just 8.94% for the Russell 2000 growth index.