Value investing

I’ve recently discovered the world of value investing. Reading Security Analysis by Benjamin Graham is fascinating, and diving into Value Line, which you can access with your library card, the patterns are becoming clear. Value Investing is all about buying stocks when they are irrationally priced too low. (this is not investment advice). And that got me thinking about running a company, where your business is often under-valued. You can see this in the public markets, where a company’s “value” swings by 2-3x, despite the revenue and earnings moving slowly upward over time. The same thing happens in private businesses, where at times you are the hottest commodity, and other times you are are out of favor in the public eye.

Typically, these feelings towards your business are not reflective of the actual growth of the company. The actual growth is usually much more gradual and consistent. That’s why I would recommend making your world smaller if you run your own company. Focus on the things in your control, which are your customer growth, revenue growth, marketing strategy, and product development. The feelings that others have towards your company will swing wildly over time, but the persistent progress of the main components that make up your business will move you upward over time.