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I've heard Charlie Munger say all investing is value investing. Or some variation of that. There are many great companies to invest in so I don't see an issue.

I've heard Charlie Munger say all investing is value investing. Or some variation of that. There are many great companies to invest in so I don't see an issue. Hell, putting all your money in FANG for the next 40 years is probably going to work out quite well.

skybrian 6y ago
It might work out, but how do you know? Are all prices good? How do you decide when the price is too high? Value investing was originally about valuing companies based on tangible assets. This doesn’t work very well for technology companies.
- ketamine__ 6y ago
  If you're going by the advice of Charlie Munger you buy a small number of companies and never sell.
  - skybrian 6y ago
    In that case you don't need to decide when to sell, but you still need to decide whether the price is low enough to buy.
- repsilat 6y ago
  One interesting interpretation: some folk say that if you make money in the market it's because you drove the market towards efficiency. If you bought low and sold high (control for inflation/rates/dividends/whatever) your purchase pulled up the price when you bought and pushed down the price when you sold, and the "time-traveller's arbitrage" was reduced. Say a company will live for 1 year, pay no dividend and perform no buybacks, but has some stock price. Say -X(X-1), so it starts at price=0 at t=0, ends at price=0 at t=1, and has positive but illogical/inefficient positive prices in between up to a maximum of p=0.25 at t=0.5. Now, someone who bought then sold on the up-slope -- with price impact -- would make money but increase the difference between the price curve and "true value" (which is the equation p=0.) But if you iterated those buying and selling operations with time-travelling argitrageurs, the realised value would eventually be the true value. The price curve would be p=0. So, in conclusion, maybe "all investing is value investing" is false under this interpretation, but true if there are time travellers involved. (There is almost certainly a more charitable phrasing.) Thank you for attending my TED Talk.

skybrian 6y ago

It might work out, but how do you know? Are all prices good? How do you decide when the price is too high? Value investing was originally about valuing companies based on tangible assets. This doesn’t work very well for technology companies.

ketamine__ 6y ago
If you're going by the advice of Charlie Munger you buy a small number of companies and never sell.
- skybrian 6y ago
  In that case you don't need to decide when to sell, but you still need to decide whether the price is low enough to buy.
repsilat 6y ago
One interesting interpretation: some folk say that if you make money in the market it's because you drove the market towards efficiency. If you bought low and sold high (control for inflation/rates/dividends/whatever) your purchase pulled up the price when you bought and pushed down the price when you sold, and the "time-traveller's arbitrage" was reduced. Say a company will live for 1 year, pay no dividend and perform no buybacks, but has some stock price. Say -X(X-1), so it starts at price=0 at t=0, ends at price=0 at t=1, and has positive but illogical/inefficient positive prices in between up to a maximum of p=0.25 at t=0.5. Now, someone who bought then sold on the up-slope -- with price impact -- would make money but increase the difference between the price curve and "true value" (which is the equation p=0.) But if you iterated those buying and selling operations with time-travelling argitrageurs, the realised value would eventually be the true value. The price curve would be p=0. So, in conclusion, maybe "all investing is value investing" is false under this interpretation, but true if there are time travellers involved. (There is almost certainly a more charitable phrasing.) Thank you for attending my TED Talk.