A Man's Search for Value

As I pass the 4 month anniversary of my value investing journey I’ve still not made a new investment into a company. I’ve continued to hold my existing investments and to contribute monthly to 3 funds. This is in line with my strategy of continuing to capture value by dollar cost averaging into low fee funds while I seek out carefully curated opportunities that have market beating potential.

At the start of this journey I might have considered my current lack of investment activity in specific companies a failure. So eager I was in January to find my first value company and deploy capital. However, I now see the lack of activity as a positive. Throughout all the reading, watching and listening I’ve done over the past 3+ months, one take away is clear…I simply must wait until the right opportunity arises. 

There are no rewards for action, and the fees associated with constant trading will act as a drag on performance. My entry price will go a long way to determining my eventual outcome. I must be patient until the equities I like are priced attractively with a sufficient margin of safety.

In my last blog I mentioned feeling overwhelmed by the sheer volume of companies one can invest in. Through my learning this month I’ve actually learned to think the opposite. I’ve started approaching my analysis from the viewpoint of removing potential opportunities en masse. For example, my immediate focus is not on the mega cap companies, so let’s discount them. I’m also not focussing on drug discovery or deep science companies, so let’s remove them from the list. This approach is really helping narrow my focus on an ever smaller number of companies. I’m working towards having a manageable number of companies I can focus deeply on, learn about, and then (potentially) invest when the time is right.

Key takeaways from this month:

• Action should not be measured by the number of investments made, but rather by the number of hours spent honing my craft and being ready to act when attractive opportunities present themselves. 
• I must remember my performance timeline is the remainder of my lifetime, which I hope to be at least another 40 years. With this in mind, there is no urgent need to make rash decisions and put my limited capital at unnecessary risk. I’m still continuing to capture value via the monthly contribution to my funds.
• I don’t need to beat the market every year. I need to make sure that over a sufficiently long time horizon my performance outperforms the market. In seeking attractively priced stocks I will likely be going against market sentiment, and it might take some time for my rationale to be proven (or not) out. I must counter this with the old adage of ‘being too early is indistinguishable from being wrong.

As always, thanks for reading. Currently, for my next blog post, I’m planning to share the list of questions I’ve been developing to parse investment opportunities.

P.S. – Month 4 has been a tough one. Both work and family life have been super busy. This short blog might not be groundbreaking, but I’m proud that I’ve posted something before the end of April to keep my aim of posting each month.