Umm.. "A Defense of Value Investing", I guess?

Forward: I recently found myself hitting a milestone I always said would be the trigger for me getting a tattoo of the future value annuity formula (that alone should tell you how I approach investing).. it's a long story, and I won't be discussing the trigger point, or even the metric I was grading myself on (it was not simply Net Worth), but regardless, it was my goal, relative to time. The tattoo, even in a less obvious location, has triggered some more investing-oriented conversations at work. Since I found myself explaining what I do and why, maybe someone else would be interested.

I've seen quite a bit more debate these days about "value is dead", "look how good x turned out to be, why didn't you 'invest' in the exuberance?", etc. I obviously can't speak for anyone but myself, but here's my answer, as someone who is coming from a blue-collar level income.

When you are younger / when sums are smaller, there's not a big loss to taking on higher risk. If your investable sum is what you can save back in a couple months (if you scrimp and save), who cares? Now, maybe when it gets a bit bigger, you're not going to bet it ALL on some meme coin, you'll diversify, pick something slightly safer, etc.. some way to reduce risk. This will inevitably continue to develop as you accumulate wealth, because the sums you are dealing with will be harder and harder to replace w your paycheque savings. Eventually, ppl will hit a point (hopefully) where the sums are so large, the risk of absolute loss, on any sum worth the time considering, is unacceptable. A friend of mine successfully bet $1000 on the SPCX ipo, and got out w an excellent return. We had talked about it ahead of time, and I had said that I thought he was likely to make money, but for the amount of time I'd want to be paying attention to it to catch the turn when it corrects, I wouldn't be worrying about it. My returns appear to already be limited by my time to consider investments, so I'm not looking to spend that frivolously.

This is likely a large part of why value investing is viewed as "for old ppl" by the 20-somethings w their robinhood accts (says me, at the ripe old age of 43). Many, like me, have fallen victim to their success, and just don't allocate the time to the more gamble-y stuff they used to do when they were younger. (Another factor, of course, is the washout period.. it is probable that of any group who like to play russian roulette, there are only 5/6 as many ppl talking about it after round 1.. so after a decade or two of investing, you'd expect to see a higher % of the population being from the groups who chose lower risk).

Anyway, that, in my opinion, is why value investing is the superior decision for many ppl. It's not that I am confident that it will produce superior returns, or even that it will produce superior RISK-ADJUSTED returns (though that is a distinction that is often overlooked by ppl bragging online). Essentially, it comes down to "if I'm already on a trajectory to achieve what I want, any increase in risk is a bad bet, as I don't place much value on the upside".

PS - Buffett and Munger's talk of low expectations is a huge help here.. accepting that I'll never own a Lambo means getting to a desired trajectory is quite a bit easier. :)