VALUE INVESTING
The Value Of Dinner Parties

By Stephen Bland (TMFPyad)
January 11, 2002

Last night the bird and I were invited to dinner with some friends, just off Archway in North London. As a kid I recall many times travelling with my dad along Archway, so named because of an elegant arched bridge carrying a road over the main thoroughfare bearing that name. I remember how enormously high and spectacular the bridge seemed to be over the main road, as if it was spanning some fabulously deep gorge. But now it doesn't look like that at all. It is much lower and though still a nice design, it is not spectacular any more. Don't know why they lowered it.

Anyway, the dinner party was memorable for the absence of those two interminable topics of London dinner party conversation monotony, the price of property and the merits of various schools. So the conversation flowed. Communism, business (like myself, the lady of the house has her own), though things got perhaps a bit overheated when we got on to discussing a particular self help course which three of the people there had attended and about which I harbour a certain cynicism bordering on fanatical and irrational loathing after taking a look at the way it operates.

At that point I noticed lying around a copy of a tech shares newsletter and the FT so naturally I asked our hosts if they were interested in the stock market. I was told yes and in particular that the newsletter had been quite successful until more recent times when techs fell. I am in two minds about tipsheets. I know that some people have had a certain success with them whilst knowing also that many of the publishers make claims for them that could never be repeated in the real world by an actual investor. On balance I doubt that they are much good, though there may be exceptions.

As far as I know there is no value tip sheet in the UK, though I'll admit I haven't researched this. It is perhaps surprising that nobody has thought to launch one, particularly in the wake of the value fad that has occurred after the disillusionment which set in following the fall of techs. You might have expected one to spring up in such a situation. I guess though that there wouldn't really be enough material to fill its pages on a frequent enough basis, and by forcing it to do so, the whole thing would necessarily have to become diluted into lower quality selections, a problem from which probably most tipsheets suffer anyway.

I have been a victim myself of this syndrome because at one stage I used nearly every week to write here about a particular share. But as any experienced value investor knows, there simply are not enough quality value shares around to make it possible to feature one a week so you end up lowering your standards just to fill up space. So I decided that I would no longer do this and instead write articles like these in the weeks when I was not sufficiently convinced of the merits of any share to comment on it here.

And the moral is...

So it sometimes goes with the investor's own money. If you have certain criteria as a value player, or indeed any strategy, that have worked well for you in the past, then I advocate strongly that you stick to them and don't be tempted to dumb down them if you cannot for a time find any suitable shares. I personally have been out of the market and in cash for perhaps up to a year on occasion. At such times, particularly if you see others doing well, there can be a strong lure into either taking up a watered down version of your strategy or perhaps trying an entirely different one simply so as to be in the market rather than cash. It is likely to end badly.