´´ Value Investing Japan

Friday, January 6, 2017

On The Beauty of Value Investing

When I first encountered the Intelligent Investor by Benjamin Graham it was like a revelation. After finishing the book I was in the same emotional state like when I first saw Michelangelo’s frescos in the Sistine chapel. The strong feeling was even intensified when I read Security Analysis by Graham and Dodd.

The beauty of Michelangelo’s work will be clear to most of the readers of this post. But how can books about investing, for most indeed an extremely boring and dull matter, be described as beautiful.

The beauty of the concept to investing outlined by Graham and Dodd is twofold. Firstly, it is to be found in the basic premise that you invest in a business and not in a piece of paper. The corollary of the statement is that the act of investing should be seen as running a business. A much more comforting position to find oneself in than seeing an investment in a stock just as a ticker symbol. The investor who sees investing as a business venture is able to develop an entrepreneurial spirit. Those investors who are able to develop that spirit will have a huge advantage over their competitors. Mainly because of the well-defined purpose, desire and passion, imagination, persistence, believes, seeking of knowledge and many other powerful values the entrepreneurial spirit entails.

The second beauty aspect of the value investing concept outlined by Graham and Dodd is its simplicity.  No rocket science involved but rather plain- vanilla arithmetic. Adding, subtracting, multiplying and dividing. And no dear readers, making a DCF analysis is not beautiful! DCF analysis is free jazz. Nice to look at, but you just do not want to listen to it.

Those investors who combine the aforementioned entrepreneurial spirit with the simple framework to value investing outlined by Graham and Dodd will be highly successful on the long- run. Not only in the field of investing, but rather in many other aspects of life too.

Tuesday, December 6, 2016

Value Investing: The Wisdom of the Samurai (2)

Make no mistake dear reader. Stock market investing is a form of war. The enemy is the market, especially financial institutions and institutional investors. They have to be fought ruthlessly over a long period of time. But in order to take advantage of financial institutions, and crush the market over the long- haul, you need not only to have a sound process but also a strategy.

Sunday, December 4, 2016

Value Links of Interest

Behavioral research phenomena such as loss-aversion, overconfidence, and lottery preference, account for the value of “cheapness” much more directly. These behavioral approaches suggest that value strategies that focus on undesirable, boring, ugly, and hence, “cheap” areas like distressed securities deserve special attentions, and are likely to continue to be successful as long as the underlying behaviors persist.

Value Investing's Long Run by Bruce Greenwald (Columbia Business School)

Tuesday, November 8, 2016

Did Korekiyo Takahashi Save Japan?

The Showa Depression of 1929-1932 wreaked havoc on the Japanese economy and society. Its main consequences can be described as follows. The macroeconomic downturn was felt primarily in falling prices and not so much in output contraction.

The Japanese society as a whole was hit hard by the Showa depression, especially in rural areas. Rural impoverishment became severe around 1931. During the Showa depression the Japanese public became greatly frustrated with the deflationary policy of the second Wakatsuki Cabinet and, finally, the government was removed and was succeeded by the Inukai Cabinet in December 13, 1931. (Ohno)