On 23/01/2014 14:54:14,
I very much enjoyed
this piece from VII. After practicing for a short while now, I
appreciate how tough real value investing is. It's true that on the one
hand, you can't know the future, but on the other, value investing is
predicated on buying at a discount to the present value of future cash
flows. It's something of a paradox.
The article mentioned indexing - I was reading Bill Miller's old
letters, and at one point he points out why he believes indexing often
works better than active management. Indexes are composed of mostly high
quality companies, held for long periods of time with relatively little
turnover. How many active portfolios have the same characteristics? I
hadn't considered that perspective previously.