Did Value Investors Survive 1929-1932?

[IShopAtPublix]

I had a few good laughs reading "The Intelligent Investor" The supposed "granddaddy of them all" (value investing) lost 70% in the depression.

Value Investing has no future. Most global markets are going to be sideways markets for quite some time. That means trader's paradise and anathema to investors. What US experienced in the 2nd part of the 20th century is economic growth never to be repeated again. US was the center of the world manufacturing, and with few exceptions, technology too.

 

[makloda]

Of course they survive, since Graham and Buffet don't use leverage.

 

[ralph00]

FWIW, the modern day Ben Graham, Seth Klarman, has done well through this whole bust. I think his avg return over the past 20 years remains over 20% annually. He's sitting on a mountain of cash and has been busily putting it to work.

 

[IShopAtPublix]

Quote from ralph00:

FWIW, the modern day Ben Graham, Seth Klarman, has done well through this whole bust. I think his avg return over the past 20 years remains over 20% annually. He's sitting on a mountain of cash and has been busily putting it to work.

http://www.businessweek.com/magazine/content/06_32/b3996085.htm

From 1983 (when people gave him $27 mill to manage) to 2006 he compounded 6,133% after fees and S&P had 1,517%.

I wanna see how value investors perform during periods of great stagnation (Nikkei anyone?) and not through booms and technological booms. For people starting in 2008 (during sucky times) I doubt anybody will compile a decent performance for the next 20 yrs.

 

[IShopAtPublix]

Quote from IShopAtPublix:

http://www.businessweek.com/magazine/content/06_32/b3996085.htm

From 1983 (when people gave him $27 mill to manage) to 2006 he compounded 6,133% after fees and S&P had 1,517%.

I wanna see how value investors perform during periods of great stagnation (Nikkei anyone?) and not through booms and technological booms. For people starting in 2008 (during sucky times) I doubt anybody will compile a decent performance for the next 20 yrs.

As an addendum to this let me give you an example. A freshly minted convert to the idea of value investing takes a $1000 and decides to put it in some "valuable" company. What do you think his return for 2008 would be? Or 2009? If he got 30% that would be good stuff. Not caring about value it is possible to make several hundred percent in a matter of week(s) employing only technical analysis.

 

[ralph00]

Quote from IShopAtPublix:

http://www.businessweek.com/magazine/content/06_32/b3996085.htm

From 1983 (when people gave him $27 mill to manage) to 2006 he compounded 6,133% after fees and S&P had 1,517%.

I wanna see how value investors perform during periods of great stagnation (Nikkei anyone?) and not through booms and technological booms. For people starting in 2008 (during sucky times) I doubt anybody will compile a decent performance for the next 20 yrs.

LOL. I'm pretty sure Klarman didn't own any tech throughout the 90s, and was mostly on the sidelines during the commodity and financials bubble during this decade. He still managed to outperform nearly everybody. Now w/all the cash he didn't waste chasing the Agriums, Countrywides, and Freeport-Mcmorans, he's buying corporate debt yielding 15-30% and oil&gas limited partnerships yielding 30%. Let's give the guy a little bit of credit.

 

[IShopAtPublix]

Quote from ralph00:

LOL. I'm pretty sure Klarman didn't own any tech throughout the 90s, and was mostly on the sidelines during the commodity and financials bubble during this decade. He still managed to outperform nearly everybody. Now w/all the cash he didn't waste chasing the Agriums, Countrywides, and Freeport-Mcmorans, he's buying corporate debt yielding 15-30% and oil&gas limited partnerships yielding 30%. Let's give the guy a little bit of credit.

Rising tide lifts all boats... Bull markets don't only lift "HOT" stocks they lift pretty much everything(though not in equal proportion).

There is a difference between getting rich by managing somebody else's money and making a living off of your own capital. If you start with $1000 in 20+ yrs he would have made you $60000(roughly 60 times) nice but nowhere near rich.

 

[nutmeg]

Imo, the single largest threat to value investing is liability exposure. You cannot know where and when it'll happen. One example is asbestos litigation which bankrupted many cos.

The second part which may make the "Intelligent Investor" not as relevant is gov't intervention to regulate social policy through large corps. This is another long range wild card. This may not be a great example but GM managemnt (maybe Wagnor) who said that he hadn"t realized he would spend all his time managing health care and pension benes instead of building cars.

 

[makloda]

Quote from IShopAtPublix:There is a difference between getting rich by managing somebody else's money and making a living off of your own capital. If you start with $1000 in 20+ yrs he would have made you $60000(roughly 60 times) nice but nowhere near rich.

Just wondering, what investment strategy would have made you rich(er) with $1000 20 years ago?

 

[IShopAtPublix]

Quote from makloda:

Just wondering, what investment strategy would have made you rich(er) with $1000 20 years ago?

I am not an investor I am a trader.