Value Investing: A Brief Introduction

After a great deal of reading on the philosophical principles of investing, one process of thought stuck out to me, well beyond the rest, as the most logical and, most likely, profitable. This concept is known as "value investing" (or contrarian investments depending on the speaker). I could easily write books in order to effectively communicate my logical elimination of investment and trading principles as well as arrival at the ideas backing value investing, but I would merely be standing on the shoulders and diluting the words of Seth Klarman, Warren Buffett, Benjamin Graham, and many other value investors I have read. Seth Klarman (Founder and Managing Partner of Baupost Group) defines value investing as follows:

“Value investing is the discipline of buying securities at a significant discount from their current underlying values and holding them until more of their value is realized.  The element of a bargain is the key to the process.  In the language of value investors, this is referred to as buying a dollar for fifty cents.  Value investing combines the conservative analysis of underlying value with the requisite discipline and patience to buy only when a sufficient discount from that value is available.” (Klarman, Seth A.  “Margin of Safety,” p. 64.)

My goal, through this blog, is to develop my personal philosophy on value investing, while continuing studies in risk aversion, catalyst development, macro thesis, and fundamental intrinsic valuation. In the process of doing this, I plan on researching components of market research where the mathematics behind processes are assumed. (I think I will start with Fibonacci sequences in Financial Predictions) I also intend to use statistics to obtain higher levels of accuracy in my risk and risk adverse reports. I intend to take Nassim Taleb's methods of risk valuation (Robustness/Anti-Fragility) and obtaining fluid use of his functions and thought process. At some point, I plan to compare value investing to other methods of investing and trading; effectively weighing the pro's and con's of each. I also plan to include stock valuation I am and will be drafting in analyst format. Ultimately, I expect to learn tremendous amounts on the subjects finance, economics, mathematics, and statistics while strengthening philosophical investment ideals.