If you've practiced the value approach for any time at all, you've certainly suffered the pain of buying an undervalued stock -- only to see it fall further.
And that's entirely apart from those times you or I are wrong about making the purchase in the first place.
One of the benefits of reading -- and reading some more and then still more -- is coming across wise words that remind us to keep focused on the long term:
Charles Brandes, founder of Brandes Investment Partners, said in his
book Value Investing Today
"Don't expect to achieve financial success overnight. There will be periods when stocks aren't performing well. That is when patience becomes especially important to your long-term success."
Value investors commonly buy companies that are considered cheap because they are unpopular with the investing public, or the marketplace is over-reacting to negative events affecting the company.
Sometimes, after a value manager buys an undervalued company, its stock price drops even further. But they believe this decline further increases the margin of safety, providing investors with a great opportunity to buy more at a discounted price.
What it also does, in the short-term anyway, is negatively affect performance.
Regular readers know I suffered shorter term losses in stocks like Deckers and General Motors and Fairfax Financial before they turned out winners. Deckers closed out so that was a winner for certain. GM and Fairfax could become losers yet, but I seriously doubt it. Let's see what the future holds for -- you guessed it -- my two Japanese consumer lenders. Plus Mueller Water and Media General.
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