What is Value Investing Substack?
This is a blog about Value Investing.
I am a value investor. "Value", as defined in Value Investing, is simply the act of buying something for less than its worth.
The father of Value Investing, Benjamin Graham, defined an investment as an "operation which, upon thorough analysis, promises Safety of Principal and a Satisfactory Return".
In the context of the stock market, I interpret this to mean making an equity investment with the same risk:reward as bonds. This means that I treat my equity investment as a loan to the business - where the priority is to get back my principal in full rather than achieving maximum yield. This inevitably results in a heightened focus on risk management. I consider my equity investment as a slightly higher risk loan extended to the business with slightly more accommodative loan covenants - hence justifying a slightly higher yield.
The distinction to be made with regards to analysis with a fundamental focus is expecting to profit from a stock investment via only its EPS (or a sale price depending entirely on the visibility of future EPS). No profits are expected to be made exclusively from reselling the company’s shares independent from EPS.
One should treat fund management itself as the business of acquiring businesses - with its own ‘industry’ and idiosyncratic business model - rather than simply a layer of finance which drapes atop businesses.
I sincerely believe that value investing works, and would love to connect with all who fly the banner of value investing around the world.
It is my intention to share this joy of investing in businesses with you. Hope you have fun reading!
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