Lots of interesting stuff here. I just want to pick up on one aspect - are Value stocks riskier than Growth stocks? The following definition is taken from Investopedia:
To me this definition points in either direction.
At one level a Value stock is one which looks cheap. On the well worn adage that "if it looks to good to be true then..." that would point to there being some higher risk associated with Value stocks.
But I'm with Brendan, I interpret Value stocks using the other characterisations of the above definition - a boring old stock with solid dividend and earnings performance and other good "fundamentals" and thus lacking scope for spectacular future growth. A growth stock on the other hand boasts its lack of dividends and its negative earnings! Intuitively, to me, a Value stock is a bird in the hand whilst Growth stocks are two in the bush, and Brendan's example clearly illustrates this.
It is indeed circular to argue that since Value stocks have outperformed Growth stocks ergo they were more risky. This states that risk must always be rewarded. A more correct interpretation is that the risk in Growth stocks didn't pay off and one would have been better off in boring old Value stocks after all.
I totally agree, value produces better returns over the longer term and at less risk than with growth stocks. Jeremy Grantham and James Montier at GMO have conducted much research into the area from a beahavioural point of view. The facts speak for themselves.