Interesting article on Oddball Stocks. I posted a response there, but it looks like his dog ate it. So I post it here:
“The problem is we think we might know our best idea, but we really don’t.”
Indeed. There’s a PDF being linked (sorry, don’t know what it is) on Twitter about catching falling knives. It noted that the median return was quite poor, but the mean was performed above average. I seem to recall Geoff Gannon saying the same thing about net-nets.
So it could be that there’s a significant “long tail” to value investing – in other words, it’s the few outliers that hit the ball out of the park, pay off the losers, with performance left to spare. That requires diversification, not concentration.
PS The one thing we do know for sure is that when blog requires authentication and captchas to submit a blog comment, there’s a significant probability that your comment will be redirected to /dev/null. Save your comments in an editor before posting.
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