Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window - Peter Drucker

Value

The intelligent investor should do business with Mr. Market, but only to the extent that it serves your interests. - Benjamin Graham

 

We are looking at situations where stocks seem to be trading for much less than their intrinsic value. We look at stocks as fractional ownership of the company and not as numbers that go up or down on the stock board. We cannot predict the future, so we can only increase our margin of safety when we buy stocks for the future at a very low price.

Psychology

The biggest investing errors come not from factors that are informational or analytical, but that are psychological. - Howard Marks 

 

We are looking at situations where universal psychological biases (herd behavior, overconfidence, loss aversion, etc.) create inefficient markets. We are especially aware of the bias to see causal connections where there are none (fooled by randomness) and the bias to be overconfident about our ability to predict the future.

Special Situations

Something out of the ordinary course of business is taking place that creates an investment opportunity. - Joel Greenblatt

 

We are looking at situations that are special or unusual in a companies life cycle (spin-offs, mergers, restructuring, etc.). Although we cannot predict what these situations will mean for the future of the company, we know that they inherently increase the likelihood of inefficient market pricing, typically because of investor psychology.