While it might seem that anyone can be a value investor, the essential characteristics of this type of investor-patience, discipline, and risk aversion-may well be genetically determined.
Value investing is risk aversion.
In contrast to the speculators preoccupation with rapid gain, value investors demonstrate their risk aversion by striving to avoid loss.
So my message is in whichever realm, be it going into space or going into the deep sea, you have to balance the yin and yang of caution and boldness, risk aversion and risk taking, fear and fearlessness. No great accomplishment takes place, whether it be a movie or a deep ocean expedition, or a space mission, without a kind of dynamic equipoise between the two. Luck is not a factor. Hope is not a strategy. Fear is not an option.
I believe we are in a world where innovation in stuff was outlawed. It was basically outlawed in the last 40 years - part of it was environmentalism, part of it was risk aversion.
Below, we itemize some of the quite different lessons investors seem to have learned as of late 2009 - false lessons, we believe. To not only learn but also effectively implement investment lessons requires a disciplined, often contrary, and long-term-oriented investment approach. It requires a resolute focus on risk aversion rather than maximizing immediate returns, as well as an understanding of history, a sense of financial market cycles, and, at times, extraordinary patience.
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