Value Investing is buying excellent assets when they are cheap and holding them until the markets recognize their intrinsic value.
When the market price equals or is higher than our estimate of value, we sell.
It is very important to keep transaction costs low.
Buy low and sell high is not easy: you have to buy when the news is bad - that's the only way they get cheap - and sell when the news is great - only with good news do buyers appear in great numbers and drive up prices.
Doing the opposite of what everybody else is doing is hard and most investors are incapable of doing this consistently.
Buying an excellent asset cheap and selling it, at least, at a fair price is the best say of protecting your financial patrimony.
The great challenge of investing is achieving great returns with limited risk. In order to achieve them, it is essencial to invest with a Margin of Safety.
The Margin of Safety is the difference between the Value and the Price of the asset.
The bigger the difference is, the smaller the risk of the investment and greater the return the investor will achieve in the future.
Buying cheap and having the patience to wait are essential requirements for investment success.
History shows only a long term investment horizon allows the consistent growth of your patrimony.
In the short run, prices found in the stock markets can be very different from the real values of the underlying businesses.
In bubbles, optimism reigns and assets trade at prices far above intrinsic value.
In crashes, pessimism rules over investors and prices drop far below fair value.
In the long run, however, markets always reflect the true value of assets.