Here’s an alternative view of why value investing works (see indented quote below). It’s obviously not the only reason, but it strikes me as something that’s likely to perpetuate (at least in the U.S.). I’ll elaborate by adding a generalization that few people read and who knows how much they gain/retain. Thus, for investors, the competition is fundamentally guaranteed to be fairly limited. Combine the above with the interesting studies of Horizon Kinetics (see @HorizonKinetics on Twitter), for example, as well as with the long recognized reasons why value investing works, and our chances are even better yet. Google this post’s title and for those who haven’t seen Tweedy, Browne’s related report, include its name in your search. In last week’s Barron’s editorial, “Commencement Address: On diminishing the value of a college education,” by Thomas G. Donlan, the following excerpt caught my eye:
The U.S. tried this before [reducing “barriers” (to college completion)]. A broad movement arose at the end of the 19th century to bring more Americans to a higher level of education. Fewer than 15% of Americans had graduated from high school, so high school was made into a free entitlement, with lower academic standards. By 1999, 83% of Americans had graduated from high school, but they had to go to college to get something like the education that high school grads received in 1900.