Value investing. Value investing works well because:
- It doesn’t work all the time. If it worked all the time, it wouldn’t work. Too many people want to get rich quickly, and too few are willing to endure periods where their results/thinking appears out of sync with the mainstream.
- It is aligned with how you would act as a business person, not with how you would act as a speculator. As a value investor, the most important question is what would you pay for the whole business if there were no securities market to sell it on, not what you think other market participants would pay you for the security down the road.
*There are many behavioral and institutional pressures which prevent most markets participants from pricing securities in such a way as to make value investing no longer work (i.e. arbitraging away the inefficiencies which give rise to value-based opportunities).
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