Value Investing

It is my belief that we’re currently (2017) in one of the most challenging periods for value investing strategies ever. Value investing isn’t broken. But its effectiveness depends on current market condition and the strategies used by value investors.

It’s important to understand how these factors impact the returns that investors can expect from value strategies. My nine-part series explores these issues in detail:

  1. Value Investing – Don’t get Skewered!
  2. Losers in the Driver’s Seat
  3. Margin of Safety – the Clock’s Ticking
  4. Reinvestment risk – Got any ideas?
  5. Growth – the Enemy of Value Stocks
  6. When cheap isn’t cheap
  7. Hitting the target
  8. We liked it at $10, so we like it even more at $7
  9. Value Investing – Some Suggestions

In summary,  value stocks are no longer cheap. This affects the mechanics of value strategies in multiple ways: a reduced margin of safety,  an increased likelihood of poor performance, and a higher-level of reinvestment risk, to name just a few.

At the same time, many value investors do themselves no favours. They sell stocks as they approach their estimate of intrinsic value. This usually means selling winners too soon. And they often increase the risk of poor performance by averaging down.

The final post in this series contains suggestions to help value investors to adjust their strategies to deal with the current environment. It considers how value investors can combine risk management techniques and different approaches portfolio construction to improve results.

I hope that you enjoy reading this series of posts. As always I’m keen to hear from you if you have any questions or comments.

I’m especially keen to hear form any value fund managers that would be interested in working with me as a consultant to try and fix some of these issues. Please get in touch via the contact page.