What’s in a name?
My introduction to value investing occurred only about 18 months ago. The catalyst for this was my return to Australia from a long stint overseas and reviewing the performance of my superannuation portfolio which I had entrusted to a major Australian investment house. The performance of the portfolio was very poor and the management fees I was paying them to have the portfolio ‘actively’ managed were pretty large leading to a 20% loss in the 6 years that I was away. Having worked in the financial sector my whole career, I should have known better and I’m sure I’ll post further thoughts on the investment industry and the misalignment of incentives in the future. Anyway, it was at that point that I decided to start taking control of my own portfolio and investment decisions.
I started in much the same way as I imagine many other value investors got hooked, which is by reading “The Intelligent Investor” by Ben Graham. Heralded by Warren Buffett as “the best book about investing ever written”, I figured it was a good place to start – if it’s good enough for Buffet, then it’s plenty good enough for me. I was amazed at how much the book resonated with me. I came to the immediate recognition that what I thought had been people ‘investing’ in the market was mostly pure speculation. For those that haven’t read it, what is truly striking is that despite the original version being written over 60 years ago, the principles explained in it are still so incredibly relevant today. In fact, the way that I look at individual stocks, the market, industry participants and the way that they behave has become so much clearer.
Since then, I have read extensively about value investing and I’m constantly amazed by the variety of approaches and applications of the value investing philosophy. However, from my perspective there tend to be two main tenets of successful value investing:
- Valuation analysis based on some form of fundamental and observable valuation criteria; and
- A highly disciplined approach that ignores or minimizes many of the psychological/emotional pitfalls experienced by most investors.
The more that I read on the topic, the more I become convinced that the second element plays a larger role than most people realise. Through various deep-seated psychological biases, we are inherently flawed in a way that makes it hard to invest in an independent and unprejudiced way. If you look at any of the best value investing books, you will see that this is a common theme.
It’s on this basis that I chose the name of the blog. Admittedly it’s a little dramatic – however, I wanted to choose something that I thought was relevant to the way that I want to invest. Vor is the Viking goddess of discipline and this is the primary goal that I want to try to achieve in my investing. To have the discipline to not let emotion and other psychological biases impede rational thought. To stick with what has been proven to work over the long term. To identify and ignore the hype of industry participants whose incentives are not aligned with mine. To avoid the comfort of following the herd. This will undoubtedly be a hard path – one which will be my own investing Odyssey.