Value Investing

Let's revisit Warren Buffet's classic article — The Superinvestors of Graham and Doddsville

He begins with a thought experiment comparing stock picking to random coin flipping: 

Imagine a national coin-flipping contest for 225M Americans. Each wagers $1 on their prediction; winners earn from losers. After 20 days, 215 are left with perfect streaks. They might get cocky, even write books on their strategy. Business schools would argue that if 225M orangutans did it, only 215 would remain by day 20.

But what if 40 of those orangutans were from the same zoo? What made them different?

The same happens in investing. Different "villages" of thought—minds fed similarly—produce similar returns.

Warren gives examples of investors following Graham's value approach: buying dollars for cents, maximizing the gap between price and value. Schloss (21%), Ruane (18%), Munger (19%), Guerin (32%), Perlmeter (23%) — all of Charlie’s investors (29%) have consistently outperformed the market by 3-4x over 20 years