Value Investing vs. Value Pretending
For more than 50 years, great “value” investors — Warren Buffett, Benjamin Graham, Charlie Munger, Seth Klarman, to name a few — have been touting the benefits of investing when there is blood in the streets, buying businesses when they are on sale. At each turn, somebody would ask them: Aren’t you concerned that, by constantly talking about how you became so successful, you’ll create a following that will, in turn, increase competition and reduce your potential investment returns?
It is said that value investing is more popular today than ever before. I tend to disagree.
I am going to journey back to a time before I was born: 1958. The Dow Jones Industrial Average [DJIA] averaged about 10% a year from 1948 through 1957 (when looking at the average closing prices during that time). Stock prices were quoted in eighths and quarters, but most regular people only saw those quotes once a day — in the morning paper.
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