Why Value Investing Works for All Stock Categories


I would like to credit my good friend Jeff Miller for providing the inspiration for this article. In his recent article titled “Weighing The Week Ahead: Falling Confidence A Possible Threat To Markets” he suggested a must read article by Safal Niveshak titled “Why Value Investing Works.”

From my perspective, although Safal Niveshak’s article was both short and succinct (reading time 4 minutes) it was jampacked with profound long-term value investing wisdom. Therefore, if you care at all about your long-term investing success, please take the few minutes necessary to read and contemplate this important work.

In other words, I would like to echo Jeff’s recommendation because it really does justice to one of the most profoundly successful investment strategies followed by and recommended by the most highly recognized investment greats of our time. Of course, I’m referring to investing legends Ben Graham, Warren Buffett, Phil Fisher, Peter Lynch and Joel Greenblatt to name just a few.

Excerpts from: “Why Value Investing Works”

Why Value Investing Works starts out by sharing a quote essentially attributed to Joel Greenblatt as follows:

“Jack Schwager, the author of Market Wizards series, when answering a question on whether value investing works, turned to the wisdom of Joel Greenblatt, one of the foremost experts on the subject.

Schwager quoted this from his interview with Greenblatt –

Value investing doesn’t always work. The market doesn’t always agree with you. Over time, value is roughly the way the market prices stocks, but over the short term, which sometimes can be as long as two or three years, there are periods when it doesn’t work. And that is a very good thing.

The fact that the value approach doesn’t work over periods of time is precisely the reason why it continues to work over the long term.