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Characteristics of the value investor

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Nila Sweeney

‘Be fearful when others are greedy and greedy when others are fearful’
– Warren Buffet

The value investor needs to be patient, above all else. Be prepared for some hard work and have the tenacity to persevere in research. A head for figures and an interest in business would also help.

A contrarian nature is also a must. Chris Kimber says “The reason why people end up losing money is that they tend to buy when the market is up, and they sell when they feel bad, when the market is down. They do exactly the opposite of what a disciplined investor should be doing when they look at the market.” However, he adds “the successful value investor will not be blindly contrarian though, and will reverse a decision if the facts change or the initial analysis is deemed to be incorrect.”

One of the best things a value investor can do is find an ally, an expert opinion or a broker who understands and agrees with the principles behind the method.

Ultimately, though, a value investor needs nerves of steel and the courage of their convictions to make the right choices. Block out the noise and fuss of Mr Market, and you may be on to a winner.

FAST FACT: Value investing was formulated by American economist Benjamin Graham in 1928. He taught value investing at Columbia University for many years. Several pupils went on to make billions using the method, including the most famous Warren E. Buffet of Berkshire Hathaway Inc.

 

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