Capital Preservation for Value Investor

[Temperament]

http://www.gold-eagle.com/gold_digest_01...12201.html

So anyone got any good idea how to survive in the stock market?
My take is indeed to survive in the stock market as a retiree (no income from work anymore) is completely a different kettle of fish from when you are still working. i still learning from anyone cares to share.
Shalom.

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As a value investor, what will you do if your holdings dropped 20% due to downturn in economy/market (systemic issue)? Will you sell?

How will a value investor preserve his capital? Don't think the dividends collected subsequently can make up the loss of capital right?

I think perhaps what others have not yet mentioned within this thread, and which I feel is most relevant to your question, is that one should always focus on the business and not the stock market. Value Investors essentially analyze businesses and are actually, in essence, business analysts. If the investor can assess the business fairly accurately and is certain that it is a high quality business which is significantly mis-priced by Mr. Market, then he would seek to purchase more as he would have his requisite margin of safety.

So to directly answer the question(s), the value investor would be concerned with the market price only with respect to his assessment of the intrinsic value of the business, after accounting for cash fow generation, growth prospects, dividend yields etc. The market is merely a mechanism for him to transact, and should not dictate his actions. Therefore, an investor who has a sound understanding of business fundamentals and valuations would not sell during market panics/downturns, but would instead seek to increase his stake.

The value investor preserves his capital not from the accumulation of dividends to offset a capital loss. This is from the perspective of a person who looks to the market price as an indicator of whether he is "right" or "wrong". The investor would judge his performance based on whether the intrinsic value of the business is increasing at the pace which he had expected, and if it surpasses inflation. If the returns he is getting from being a shareholder exceed the cost of capital of the business (and the investor's hurdle rate), rhe is doing well, regardless of what Mr. Market thinks. Frequently though, market price would catch up to the intrinsic value of the business, though it may take a lot of time and patience.

Always remember that when a business does well, the share price would naturally follow.

Can not agree more. But still it is based on when you need the fund in the market for other purpose?