Terrapin: re: "After all, didn't I pursue value investing so that I could sleep soundly at night with a margin of safety?!?" LOL! Right! Lot of stock performance seems to improve if a person almost treats some stocks with benign neglect (i.e. ignores the stock for much of the time.) Especially for some of the growth or GARP stocks.
Very strange, eh? Value investing is based on fundamental analysis. While that means different things to each investor, the foundation for everybody is analytical, reflective and logical -- as opposed to emotional, intuitive, and reactive. We even have the quantitative, formulaic value investors who purposely try to leave out any emotional aspects to investing in the buy and sell decisions. But as you indicate, this is not possible. We are each a prisoner of our emotions. And so logic just does not apply sometimes. Because logically, for an example, if you are up 60% with value stocks in today's market, then you "should" feel that value investing works very well for you. There's really no way out of this feeling thing. Other than to realize it and go on. That is why "investor know thyself" is a good mantra. What I try to remember to tell myself is to keep investing based on my experience, not on my emotions. In other words, if you're making 60%, keep doing what you are doing regardless of the overall feelings you have for doing it.
Bringing Dr. Graham in to the picture, I don't recall anything about his saying value investors get a good night's sleep. All you get is a margin of safety. Dr. Graham had at least one mistress. Perhaps that diminished or alleviated any sleeping problems he may have had. (I'm not recommending this as a solution.)
All just my opinion, (even if I was a professional organizational development consultant in my last reincarnation, and I do think the touchie-feelie stuff is the most important stuff -g-)
Paul Senior |
