Deep Value Letter - Banner Ad / Email Capture

Saturday, August 17, 2013

Tropical Islands and Value Investing

My daughter was in in town last week for the first time since Christmas so we took a little jaunt around Florida. We ended up down in Islamorada in the Upper End of the Keys and spent a fantastic weekend taking in sun and seafood. As the weekend wound down we found ourselves discussing the age old question of why more people do not just chuck it all in and live the island life in the Keys or somewhere similar. After all there are tropical breezes, fresh seafood, sunsets, frozen cocktails and other symptoms of paradise galore and it strikes me a pleasant unrushed place and way to live.
Lots of people talk about doing it. Some even visit for a while and day dream of living there. The truth is that very, very few people ever give it all up and move to a tropical paradise or mountain hideaway town. There are jobs and schools to think about after all. You have to be prepared to basically thumb your nose at conventional thinking, separate yourself from the herd, trade in your dress shoes for flip flops and turn your back on the community at large. You have to be ready to give up the bright lights and big city life, or the comforts of suburbia, to become an island dweller and the simple truth is most people cannot do it. This makes life a little less crowded for those that do make the trade from ties to  tiki  and live a life of which most people can only daydream. The idea either makes complete and total actionable sense to you or it is just a pipe dream.
Deep value investing is a lot like that. Lots of people talk about and only a very small handful ever actually engage in the practice. Everyone can quote Ben Graham but very few people invest like him. Lip service is paid in the form of relative value and other such schemes but there are not too many investors who ignore the income account almost in its entirety to focus on the balance sheet. It flies in the face of conventional wisdom about EPS growth and hot stocks and is in defiance of almost every academic theory about markets ever taught in our colleges and universities. You have to be willing to separate from the herd and buy stocks no one else wants.  Deep value investing makes for bad television and poor tweeting most of the time. You have to practice patience beyond 4:00, and even beyond the next quarterly earnings report. You are buying companies, not tradable electronic blips in the night. It either makes absolute actionable sense to you from the very start or it does not. I see more deep value investors on the list of those with long lasting success and profits, but most cannot resist the psychological pull of the open casino of Wall Street and hot stocks.

Deep value is not for everyone. Not everybody has the discipline and patience to earn the outsize profits history shows us can be earned through business like investing practices such as buying assets for less than their full value. For those that can there is a lot of money to be made. 

Chekc out my Deep Value newsletter here - and put this approach to work for you

No comments: