Value Investing Works, Here’s Why – Jeffrey Stacey (Video – Ben Graham Centre)

Johnny HopkinsJeffrey StaceyLeave a Comment

Jeffrey Stacey is the founder of Stacey Muirhead Capital Management Ltd. Stacey has over 30 years of investment industry experience.

Stacey utilizes time-tested principles of intelligent value investing.  He says, “achieving a superior investment record is a lot harder than most people think and developing investment wisdom comes from both direct experience and a willingness to absorb lessons from others.  We have been fortunate to learn from the experiences and writings of super-investors such as Benjamin Graham, Warren Buffett, Sir John Templeton, Prem Watsa and others”.

A few years ago Stacey did a great presentation for the folks at The Ben Graham Centre for Value Investing. It’s a must watch for all value investors.

Before we take a look at the video (below) here’s the list of principles that Stacey uses for his successful value investing strategy:

Over time, we have identified the following enduring principles, which we judiciously apply to all of our investment efforts:

  • Think about stocks as part ownership of a business.
    When we buy stocks for our investors, we have a mindset similar to that if we were buying into a private business.
  • Maintain the proper emotional attitude.
    It is often the case that fear and greed drive stock market prices. We strive to tune out the daily noise that is swirling about and attempt to use market fluctuations to our advantage.
  • Insist on a margin of safety.
    We only make purchases when we judge that the companies we are interested in are available at prices significantly below their intrinsic value.
  • Establish a thorough understanding of any proposed commitments.
    We fully acknowledge that we are incapable of understanding every business and its prospects. While we constantly study businesses to expand our knowledge and improve our insights over time, a key component to our success has been the ability to stay within our circle of competence in selecting investments for purchase.
  • Do not diversify excessively.
    We believe in concentrating our holdings in a limited number of companies in the belief that we will have a chance at superior results only if we take risks intelligently. Good investment ideas are rare and when we find one, we prefer to make a significant commitment.
  • Invest for the long term.
    Attempting to invest based on guessing short term swings in individual stocks or the overall stock market is not likely to produce consistently good results. Furthermore, frequent trading in stocks can have two major disadvantages: transaction costs and taxes. We believe that investment capital will grow more rapidly if the interruptions for commissions and taxes are kept to an absolute minimum.

Now let’s take a look at his presentation:

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