Staying ahead of the performance curve while traversing today’s cookie-cutter investment landscape requires more than passive investing and intermittent engagement. Doing better than the market necessarily calls for doing something different. However, our industry’s over-reliance on the same sets of broadly available, electronically accessible data and analytics, means the notion of investors gaining a meaningful information advantage is becoming a rarity, especially among widely held funds or securities.
Against this backdrop, value investing is becoming an increasingly attractive proposition for investors who aren’t content to simply go along with the rise (and fall) of the broad market. With a focus on identifying lesser known, mispriced, or misunderstood companies that are trading for a fraction of appraised value, and then closing that gap, value investing is a strategy that tends to sell itself very well in concept. However, in practice, successful value investing requires an uncommon mix of deep study and well-developed skills to execute.
For these reasons, value investing is not only difficult for investors to do on their own, but it also presents a conundrum for many established firms and advisors. There are very few that possess the specialized expertise, and those that do aren’t prepared to make the commitment of time and resources needed to effectively make and manage these investments on an ongoing basis. The net-net of this is that investors looking to build wealth through a value investing strategy will likely need to seek help from a specialized firm that has the skill, market sense, and temperament to consistently execute an effective value strategy.