Time and value!

For one thing, it depends on an accurate estimate of value. Without that, any hope for consistent success as an investor is just that: hope. Without accurate estimates, you’ll be as likely to overpay as to underpay. And if you overpay, it takes a surprising improvement in value, a strong market or an even less discriminating buyer (what we used to call a “greater fool”) to bail you out.

There’s more. If you’ve settled on the value approach to investing and come up with an intrinsic value for a security or asset, the next important thing is to hold it firmly. That’s because in the world of investing, being correct about something isn’t at all synonymous with being proved correct right away.

It’s hard to consistently do the right thing as an investor. But it’s impossible to consistently do the right thing at the right time. The most we value investors can hope for is to be right about an asset’s value and buy when it’s available for less. But doing so today certainly  doesn’t mean you’re going to  start making money tomorrow. A firmly held view on value can help you cope with this disconnect.

Time and value!