Value Investing Defined
Richard Wong, Senior Vice President of Investment Management and Portfolio Manager of the Mackenzie Cundill Team, explains the difference between value investing and other investment styles.
RICHARD WONG: When I think about investing, one good example is shoppers for electronics. Let’s say somebody is going into an electronic store – we won’t name any names – looking for a new, high definition, flat screen TV. There’s a type of buyer who would just want to go in there and say “Hey, just tell me what is the hottest selling item. I want to buy the hottest selling item.” And I don't care about, the specs or the price, I just want to buy the hottest selling item. That to me is like momentum investing – buy the hottest thing because it’s selling out fast. There’s another type of investor who just wants to buy the best. “I don’t care about the price; I just want to buy the very, very best TV you’ve got in your store.” When a value guy goes into a store, he does his research, he’s looked through consumer reports, and he looks through all sorts of online reviews. He has an idea of what he wants. He wants some quality, he wants functionality and so on, but he wants a bargain as well. So he goes into a store and sees all these great TVs, but he focuses on which one’s the special for the week, which one’s on sale right now. “I can get a lot more bang for my buck.” That to me is the difference between value investing versus other types of investing.