We are value investors for many reasons, one of which is that establishing an estimated intrinsic value provides an anchor or a solid point of reference from which the turbulence of markets can be viewed dispassionately.
Calendar 2017 recorded the sixth consecutive year of positive real total returns from all major asset classes for Australian investors. It was the first time in history that everything has gone up for six straight years for Australian investors. As the market continued its relentless climb, with minimal volatility, value investing had been relegated to history and even I began to question the relevance of value investing myself.
But as recent market weakness has shown, momentum doesn’t gently or slowly roll over, it violently reverses, wiping out a large proportion of previously accumulated gains and delivering very volatile overall returns.
This whitepaper identifies why we adhere to value investing and the importance of prioritising risk minimisation – particularly the risk of capital impairment.
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.
