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Five Super Reads To Help You Calmly Navigate Choppy Markets

Five Super Reads To Help You Calmly Navigate Choppy Markets by Jae Jun, Old School Value

It’s been a while.

About 3 years since we’ve had any sort of market correction.

And because it’s been so long, you’ve probably forgotten how it feels to see your portfolio drop 10%.

I have.

So whenever markets get choppy with uncertainty or I feel like I’m falling into a worrying or fearful state of mind, I pull out my set of “emergency” articles that helps put things back into perspective and gets me back into the right frame of mind.

These articles, letters or memos act as my investing compass.

Shut out the noise, grab a soothing beverage, and read these papers.

Here are my favorite parts from each of the papers.

The Super Investors of Graham and Doddsville

The common intellectual theme of the investors from Graham-and-Doddsville is this: they search for discrepancies between the value of a business and the price of small pieces of that business in the market. Essentially, they exploit those discrepancies without the efficient market theorist’s concern as to whether the stocks are bought on Monday or Thursday, or whether it is January or July, etc.

Our Graham & Dodd investors, needless to say, do not discuss beta, the capital asset pricing model, or covariance in returns among securities. These are not subjects of any interest to them. In fact, most of them would have difficulty defining those terms. The investors simply focus on two variables: price and value.

I can only tell you that the secret has been out for 50 years, ever since Ben Graham and Dave Dodd wrote Security Analysis, yet I have seen no trend toward value investing in the 35 years that I’ve practiced it. There seems to be some perverse human characteristic that likes to make easy things difficult. The academic world, if anything, has actually backed away from the teaching of value investing over the last 30 years. It’s likely to continue that way. Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace, and those who read their Graham & Dodd will continue to...