The Business of Value Investing.pdf

66 The Business of Value Investing

general asset classes, value investors invest in securities one by one,

attempting to fi nd those opportunities that have been temporarily

tossed out by the market. And rather than needing to be invested

at all times, if the valuations are not attractive, value investors rec-

ognize that the best investment option may at times be to make no

investment at all.

Key Takeaways

• Before investing, develop a sound mental philosophy of what it is you
  are doing and understand that philosophy cold. Understand that you are
  investing in businesses, not stock prices.


• The stock market exists to afford you the opportunity to own a piece of
  a business at a sensible price. The volatility of the stock market should not
  instruct you in valuing a business. Remember in the short run, prices are
  determined by votes of the market participants.


• When you invest is just as important as how you invest. Focus on buying
  great businesses at sensible prices. The starting point matters.


• Avoid using borrowed money to make your investments. Leverage is the
  only way that a smart investor can go broke.

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