Old Investing Advice Gems from Wallstraits days

[Musicwhiz]

I agree, but with a slightly different perspective.

The principle of value investing, is look for low risk value stock, and buy cheap. It doesn't say "must" hold long term. Long term holding is a mean, not the end

FYI, "arbitrage" deals are part of Mr. Buffett investing activities, during the time the AUM isn't as huge as current one.

I've been reading books on the concept of risk and also digesting Howard Marks and his "risk revisited" write-up. The irony is that when something is considered "risky", you may not necessarily get a better reward. If not, it will not be "risky" in the first place! So he argues that it is the expectation of higher rewards which makes people feel that something is more "risky". If you observe what most investors gravitate towards, it is the hot, new and hip industries or companies which can command the most attention (or eyeballs, in the case of the Internet). But the fact that everyone is chasing the same thing means that the potential returns are significantly diluted (due to unrealistic expectations creating an over-valued situation). Therefore, I'd argue that technically speaking, investments with low risk can only exist when the expectation of reward is low, and therefore this makes the investment "cheap". Neglected companies which are churning out good cashflows but which are "boring" seem to qualify.....

The thing about "long-term" is not just for the sake of holding it for a period of time to justify an investing "bent". Businesses take time to grow and prosper, and time is after all the friend of the great business and the enemy of the weak, so one has to hold an investment for a decent amount of time to be able to see the effects of compounding. Anything less would be speculative (as it would mean the multiple has expanded without an underlying growth in earnings - all that has changed as the expectations).