Value Investing: Buy Cheap, Obscure and Out of Fashion

Value Investing Process

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- Cheap
- Ugly
- Obscure
- Otherwise ignored

Valuation
- Asset
- Earnings Power
- Franchise

Review
- Key Issues
- Collateral Evidence
- Personal Biases

Risk Management
- Margin of Safety
- Some Diversification
- Patience - Default Strategy

Important Points
- Market Irrationality Creates Opportunity
- Know what you know: Inherent Quality of Information & Circle of Competence
- Look for Margin of Safety

Professor Bruce C. Greenwald discusses his executive education course in value investing and what differentiates the practice from other investment strategies. "Most investors are constitutionally oriented to buying lottery tickets," he says. "And that's what creates the value opportunities for the plodding, careful investors."

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