theasiareport Posted September 16, 2014 Share Posted September 16, 2014 About two years back, I read an interview entitled "An Hour With Benjamin Graham". What struck me was how the author of Security Analysis felt that after a successful career in investment management, he had come to the conclusion that elaborate techniques of security analysis was a waste of time. This was contrary to all my instincts. I was leaning far more towards Warren Buffett (focused understanding of the business) than Benjamin Graham (statistical approach). Two years later, I have come full circle back to Benjamin Graham. The book Quantitative Value and countless studies have shown that simple models out-performs experts (even value investors). And unless your investing institutionally (i.e. > 100 million AUM), it seems that there are plenty of spots in which you virtually have no competent competition (micro-caps, foreign markets where no one even speaks English etc). In a strange reversal, I had the exact opposite revelation of plenty of people on the board. I started buying good businesses at cheap prices (started in 2010), went to good businesses at reasonable prices, and ended up buying sub-par businesses at dirt cheap prices. Looking at the type of analysis that we tend to do these days, with the amount of information available (spreadsheets, DCFs, poring over small percentage changes in margins etc), and what Graham or Buffett did with simple financial statements, buying stocks by going door to door etc... The question which always come to my mind (inspired from a speech I found here a long time ago) is... are we simply trying too hard? It seems to me that much of what we do simply exists just because its so easy to access information, to perform complex calculations with Excel. But are our actions actually valuable? Or are we spending too much time focusing on the 20% of work that actually yields low level results. Just some thoughts that's been on my mind of late. Link to comment Share on other sites More sharing options...
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