r/valueinvesting
A post for any new value investors out there
Veteran value investor advises newcomers to be patient, avoid rushing into positions during dislocations, and build holdings slowly.
- Value investing strategies ultimately pay off if investors have the patience to endure short-term pain.
- Unpopular trades and market dislocations eventually correct, rewarding those who hold.
- It is extremely difficult to time the bottom, and rushing into positions can lead to severe short-term drawdowns.
So I’ve been reading a LOT of SaaS articles out there, many of them complaining about how value investing sucks or these bullish calls were awful and I’d just like to add my two cents based on some experience I’ve had for anyone out there that’s newer to this stuff.
I’d like to start off with a lesson that I’ve learned the very hard way and that is that it’s EXTREMELY hard to stay on the sidelines and wait once you’ve found a compelling stock or sector. This is what for the first 15 years of my investing career lead me to be early on basically every call that I made and then I’d ride it down an additional 35% before things eventually worked out.
As a recent example during the COVID crisis I was pretty keen to buy oil companies because I never bought into the story that EVs were gonna replace ICE vehicles overnight but I was early, and the weeks and months after my purchase were very very painful. However the bet ultimately paid off enormously, but it was a very challenging time to be long and wrong.
So I guess what I’m saying is that with any market dislocation don’t be too eager to jump in right away and all at once, these things take time to play out and the best positions will get built over time. When you do decide to wade into a position do it slowly because things can often drop further. Being in an unpopular trade feels awful but more often than not it doesn’t stay unpopular forever.
Best of luck to everyone out there and I hope all your trades work out!