Round 1: Value Investing vs the “new” paradigm – you be the judge……
One of the constants of the last 10 years is market commentators saying that “this time is different” – we believe that the principles of of value investing never change, and Roger articulates the reasons why in this interview with Ticky Fullerton (and Marcus Padley!) on ABC1’s The Business, broadcast 7 September 2012. Watch here.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
caseyjtan
:
Marcus’s ultimate criticism that value investing does not ‘time” the market is not valid. By only buying AND holding shares in companies that are above its present and future (rising) intrinsic value, one time the market “bottom up” without needing to take a “top down” view of the total broad market. Roger covered this point in stating that most investment managers do poorly in not knowing when to hold CASH ie sell shares. Marcus made a valid point, in that, without timing the market (or more correctly “individual stock” as distinct from the “market” in the case of value investing), one’s investment strategy falls apart. Warren Buffett had himself returned investors’ money (cash) when there were no companies worth investing in ie timed the market “bottom up”.
Andrew Hodge
:
An excellent debate between two smart investors with diverging view points, a shame it was cut so short. It is interesting to note the important facts you do agree upon.
I think the biggest issue with peoples mindsets with regards to value investing is the perception that it is only good in the long term. I think people need to understand the difference between short term trading and short term returns on investment. Whilst the idea of the Montgomery form of value investing is to pick a quality company for long term investment this does not preclude short term gains, and is in fact more likely to lead to them if you find a good quality company at a discount to its intrinsic value.