The fundamental flaw in value investing

That was an interesting article. I'm not sure I agree with it. I think the author views value investing too narrowly. However, I do think that risk is increasing in the market. That's why I have been check the intrinsic value of all my holdings. It might be time to install stop orders across the board.

Nick, I'm glad you were eventually able to post this morning. Sorry about the technical difficulties.

Actually the I experienced difficulties on my second submission, but I reposted it moments ago.

I agree with the authors assessment (returns similar to markets returns over the long haul) of value investing if you were investing in an index of companies selected on a low P/E or P/B alone with no qualitative measures thrown in; however, if you select the best businesses that are currently the cheapest relative to future earnings, I don't see how you can't beat the market in the long run.

Hi there,

I wrote the article - thanks for the comments. I wouldn't disagree with what you've said. To make generalisations you have to draw the line somewhere between value and growth - if you draw it somewhere else you'll get different results :-) If you're interested I've posted again on the subject of growth versus value: http://blog.iii.co.uk/?p=85 .

Good luck with the site. I like it.