´´ Value Investing Japan

Saturday, August 6, 2016

Inactivity: Why Doing Nothing Should Strike You As a Rational Behavior in Investing

Chris Brown from Tweedy and Brown once told an anecdote about an investment manager he had interviewed. The money manager proudly claimed that he made 250 company visits in one year. Gosch, Chris thought “What did this guy do? Drive by the headquater and wave?”

Shortly after, another international manager claimed that his team visited 400 companies in a year. Again, Chris thought, “What did these guys do? Fly over the headquater and wave?”

Sunday, July 3, 2016

Musings on Value Investing: The "Value Trap" Misconception Trap

"A value trap is a stock that appears to be cheap because the stock has been trading at low multiples of earnings, cash flow or book value for an extended time period. Stock traps attract investors who are looking for a bargain because these stocks are inexpensive. The trap springs when investors buy into the company at low prices and the stock never improves. Trading that occurs at low multiples of earnings, cash flow or book value for long periods of time might indicate that the company or the entire sector is in trouble, and that stock prices may not move higher." (Investopedia)

The abovementioned definition of value traps is common, outright wrong and can be extremely costly for a value investor.

A genuine value trap, which is no laughing matter and a nightmare for any deep value investor, is one where a cheaply valued company has some kind of structural issue, cannot make any positive returns on invested capital over prolonged period of time, burns its cash and will eventually fail.

Wednesday, June 15, 2016

Musings On Value Investing: How To Succeed And Why Most Investors Won't

“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.” (Warren Buffett)

The process to value investing outlined by Graham and Dodd (GD) is simple and sound, but unfortunately not easy. Mainly because following it does not prevent from unforeseen adverse outcomes, especially in the form of short- term volatility.

Nevertheless, does it help to stack the odds of a satisfactory monetary outcome on the long- run for those investors with a reasonable analytic skill and, more importantly, the right mental framework.

Monday, May 30, 2016

Laziness: Why Slackers Will Prevail in Value Investing

Recently I stumbled across an intriguing Telegraph article  called: "Why being lazy and procrastinating could make you wildly successful"

I found the article intriguing because the assumptions made are extremely relevant in the business of value investing too.

In this little post, which I intended to write a long time ago, but succussfully postponed until now, I will argue that a lazy personality is not a hindrance for successfully investing on the stock market. Rather laziness is a virtue that should be welcomed and consciously embraced by investors.