The third key aspect of value investing is nearly all about eleminating mental biases: if you have
- done your homework on understanding what you own or can buy
- established an investment process to buy and sell based on margin of safety
you should – theoretically – not be influenced by syrations of the market. But human psychology is a powerful enemy of such rational decision-making:
- Fear and greed are the most basic drivers of human behavior
- Extrapolation bias, endowment bias, the Halo-Effect and other mental biases are more subtle and harder to detect.
Dealing with Mr. Market is not about what we do, but about what we do not do:
- most of the days there are no actions or trades at FORUM
- we have no Reuters or Bloomberg terminal to follow the "noise" from the market
- as part of a Family Office we do not (have to) talk to concerned investors.
