Comments on: Value Investing vs. Business Investing

By: Jason B.

Jason B. — Thu, 20 May 2010 07:02:40 +0000

Just reviewing some great blogs on your site. I love Graham definition, I think it’s the best, by far. I also think that speculation could be more than be based on the price you decide to pay for your investment. I believe that buying a stock outside your sphere of competence should be considered speculation and avoided.

I look at the definition of investment and, in my view, useful thorough analysis can’t be done by an investor that doesn’t understand the company he/she is looking at.

By: BPal

BPal — Wed, 23 Jul 2008 07:51:54 +0000

Thanks for clarifying your position. Your early posts focused so heavily on the principle that one should focus on investing in businesses and not worrying about Mr. Market and his irrational behavior, ala Graham/Buffet, that I was in fact under the impression that you were a value investor and not concerned with market movements etc., except to determine whether Mr. Market was going to offer you a bargain to own that great business.

I appreciate your honesty in letting your readers know where you stand and that you don’t in fact complete ignore Mr. Market as your earlier posts implied. In order to engage in work-outs and shorting stocks you HAVE to follow Mr. Market, otherwise to use your example of the VCR business, you too would have walked away from the opportunity on the basis that the company itself was crap.

Thanks for clearing things up.

By: jay

jay — Mon, 14 Jul 2008 05:25:26 +0000

Monish probably didn’t do his homework carefully. From DFS’s last 10-Q, you can see it heads to the bankruptcy soon. I like “For traders, there is no tomorrow; for value investors, there is no today.” So add them together, it makes the day

By: James Cullen

James Cullen — Sun, 13 Jul 2008 16:21:00 +0000

I’d just note that the loss on Buffett’s put on the S&P is an accounting mark, and not a cash mark.

By: René

René — Sat, 12 Jul 2008 04:55:02 +0000

I’ve played poker for many years. In my experience poker and investing are very similar in predicting outcomes. The people who are ignorant of poker math, (odds, implied odds, hand value, etc.) are obviously losers, but what of the rest? There are many losers there too. Many people have a superior grasp of the math, game theory and all the rest and still lose. Emotion is a big factor, as in going on “tilt” after a series of “bad beats” or letting pride making you seek the toughest games to prove your superiority. Bankroll management is a biggie. House rake is huge and often insurmountable, just like Wall Street fees often are.

I’ve become a big fan of this site and I think Joe is right on target on just about everything he posts, but sometimes I get the feeling that an exaggerated sense of security is being generated by the math of investing in particular companies. Sometimes it seems like whistling in the dark to me. I know that Joe has pointed out that once in a while we need to take our noses out of EDGAR and smell the coffee, so I know he’s not unaware of what I’m talking about. Just thought I’d throw it out there as I’m always trying to find the right balance to an investing philosophy.

By: night

night — Fri, 11 Jul 2008 17:22:45 +0000

Very nice.. I liked the poker analogies too (I recently started playing as a hobby).

By: Amit D.

Amit D. — Fri, 11 Jul 2008 12:27:31 +0000

Great post! True indeed, the investor must recognize himself in order to make correct assumptions that will affect his outcome.

By: Allen

Allen — Thu, 10 Jul 2008 18:58:28 +0000

Well said.

You have to know your goals and your tolerance for risk before you start investing, or you may end up disappointed even with 20% returns!