TJS Partners, Inc.

"Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety."

-Ben Graham, The Intelligent Investor.

Value investing is the discipline of buying securities at a sharp discount to their intrinsic value.  The element of a bargain is key to the process.  This is often referred to as “buying a dollar for fifty cents.”  Sometimes the gap between price and value is very narrow.  Other times it is very large (above or below intrinsic value).  The number of bargains can vary widely from year to year.  Sometimes a value investor will review dozens and dozens of potential investments and come away with nothing.  But that is the necessary discipline.  Value is often well hidden.  Being a value investor is by definition contrarian.  You must be willing to stand against the crowd, often times uncomfortably so (ie; do nothing when it seems like “free lunches” are widely available and everyone else is enjoying the ride.)  It can be a very lonely undertaking.  A value investor will frequently (about 1/3 of the time) underperform the market averages, sometimes by a large margin.  Yet, over the long term the value approach works so well that few, if any, advocates ever abandon it.