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Cape Town - One of the most important characteristics of a successful investor is the ability to distance decisions from the stories, rumours and speculation which abound in the market place.
This is according to Piet Viljoen, chairperson of value-based asset manager RE:CM. He was speaking at the Shifting Perspectives conference, which sought to bring together contrarian thinkers from around the globe.
Viljoen explained that the challenge for investors is that stories don’t encourage individuals to look deeply and make a proper assessment of data.
“This often leads to bad decisions. As investors, we need to train ourselves to think deeply and not believe the stories that we tell each other,” he said.
He admits that for value investors, such as RE:CM, it is scary to go against the grain and purchase the stocks that other investors do not want.
This is particularly the case when there is a lot of bad news about those particular companies.
“We believe that value investing is successful in the long run and although it might result in investors sometimes being exposed to less of the market upturns, it definitely results in being exposed to significantly less downturns," he said.
"It is better to lose less in the tough times than make the most during market highs.”
Viljoen said that by building a large margin of safety into their analysis, investors can ensure positive results in the long run.
“Purchasing shares which are priced far below value ensures this margin of safety,” he said.
He said that this involves taking advantage of depressed market periods or sectors to find quality companies which are priced cheaply.
“This is when investors are able to find bargains. These businesses are still very high in value, but due to external economic and political factors the share price has been reduced considerably,” he said.
- Fin24
This is according to Piet Viljoen, chairperson of value-based asset manager RE:CM. He was speaking at the Shifting Perspectives conference, which sought to bring together contrarian thinkers from around the globe.
Viljoen explained that the challenge for investors is that stories don’t encourage individuals to look deeply and make a proper assessment of data.
“This often leads to bad decisions. As investors, we need to train ourselves to think deeply and not believe the stories that we tell each other,” he said.
He admits that for value investors, such as RE:CM, it is scary to go against the grain and purchase the stocks that other investors do not want.
This is particularly the case when there is a lot of bad news about those particular companies.
“We believe that value investing is successful in the long run and although it might result in investors sometimes being exposed to less of the market upturns, it definitely results in being exposed to significantly less downturns," he said.
"It is better to lose less in the tough times than make the most during market highs.”
Viljoen said that by building a large margin of safety into their analysis, investors can ensure positive results in the long run.
“Purchasing shares which are priced far below value ensures this margin of safety,” he said.
He said that this involves taking advantage of depressed market periods or sectors to find quality companies which are priced cheaply.
“This is when investors are able to find bargains. These businesses are still very high in value, but due to external economic and political factors the share price has been reduced considerably,” he said.
- Fin24
