Flight #36: Top 5 Lessons Learned from Value Investing

In this episode, the Pilot Money Guys are talking about Value investing. We describe what value investing is, and talk about lessons learned as investors in value companies.

Value Investing and Lessons Learned  

1. Even though past returns are not indicative of future performance, Value investing has shown to do well during periods of higher inflation.   
2. The recent poor performance of Value investing is almost unprecedented.  Therefore, making it difficult to stick with a disciplined, diversified portfolio.   
3. Do not give in to FOMO when selecting your investment strategy.  The recent run-up in Growth Stocks was partly fueled by FOMO.  Most of the time when investing based on your emotions instead of a disciplined strategy, investors end up buying high and selling low.   
4. There is no evidence that investors can use investment timing techniques to switch from growth to value to take advantage of higher returns.  You have to stay diversified even when it feels painful to own underperforming asset classes.   
5. It is very dangerous as an investor to assume that you know things that are unknowable. For example, we do not know for certain which asset classes will outperform in the future.  Investors must remain humble, be prepared to be wrong and understand that there will always be information in the news, social media, YouTube, etc. that may seem to confirm our false beliefs. 
6. When markets are volatile you may have opportunities to rebalance into the pain.  For example, when international or value asset class is performing poorly, you can sell your winning asset classes and purchase assets classes that have not performed as well.  This is counter-intuitive, and takes discipline but results in buying low and selling high.