The Business of Value Investing.pdf

220 The Business of Value Investing

price is usually paid when investing alongside the crowd. Value

investors are wired to avoid investment areas that are the crowd

darlings. Blind faith in investing will get you killed. Such was the

experience of many participants in the Internet boom of the late

1990s. Everyone felt that it was imperative to be in the stock mar-

ket, regardless of valuations, because stocks could only go up. We

now know what blind faith did to the many who invested this way.

Like lemmings, many investors followed blindly, not knowing they

were headed over a cliff. Learning to question what you are told and

developing critical thinking skills are vital to successfully investing.

Key Takeaways

• Reciting value investing rhetoric is the easy part. Following it requires
  diligence and effort.


• As evidenced by the case studies, some investment candidates may
  require specifi c focal points in determining intrinsic value.


• Arbitrage opportunities are generally very rare in today ’ s investment
  world due to the proliferation of market participants. If an arbitrage oppor-
  tunity presents itself, assess it with a strong dose of skepticism. If it still turns
  out to be real, then jump at the opportunity.

CH010.indd 220CH010.indd 220 9/2/09 11:50:57 AM9/2/09 11:50:57 AM