Summary |
This book is dedicated to the creation of more value investors. Beyond the superior returns that a value approach has earned over time, a value investor’s discipline, widely applied, should help to inoculate both the financial markets and the wider economy from the baleful effects of bubble market absurdities. In retrospect, the effects of a bubble on the markets are obvious. On the way up, investors become too confident about their anticipated returns. Money floods in-part of the definition of a bubble-and prices rise to even more unrealistic levels. At some point, air starts to come out of the bubble. Share prices drop and some investors, including pension plans and other institutional holders, lose a lot of money. Many equity investors feel burned and move out of the stock market for good, and it takes years for new ones to take their place. The consequence of a bubble for markets, then, is to reward winners and punish losers with a savage intensity.
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