Beating an Irrational Market
In a great book “Wall Street on Sale”, the author, Timothy P. Vick, discusses the essence of value investing.
“In investing, opportunities arise when you counter prevailing wisdom, no matter how deeply ingrained those opinions. Value investing, as a philosophy, occasionally relies on your ability to sell when the crowd wants to buy, to buy when they sell, or to cast a skeptical eye when events appear rosy. No task is more difficult, even for a seasoned investor. It's like telling you not to bet at a slot machine that has paid out 10 times in the last hour or to avoid a stock that has raced up 100 percent in two months.
Value investing, in essence, is as much a character trait as a methodology—a mentality shaped by experience, knowledge, and the desire to excel at investing. A pure value investor is a pure value seeker, a person unwilling to spend more than absolutely necessary on any good, be it a dinner, a bar of soap, a new car, a house, or a new blouse.
…The stock market is a peculiar institution, the only one in the world where participants feel more secure buying an expensively priced item than one reasonably valued.
