What I have learnt about value investing

In my early days, it's about buying cheap companies. The problem with buying cheap is that the cheap companies sometimes deserve to be cheap. After losing money in fraud companies and companies that got into trouble with the law, I have evolved to not just look at valuation but also look at how good the company is (i.e. growth potential) and whether there is a catalyst for valuation to improve. This is usually associated with Benjamin Graham's cigar butt investing style in his book "The Intelligent Investor"

The next step is on safety. Some of the companies that trade at reasonable valuation have huge debts. Debts help to magnify both profits and losses. Due to huge debts, some of the companies I invested in, either went bankrupt or have to issue rights which forces investors to put in more money or risk dilution. This is usually associated with Martin Whitman's style of safety first. It is well covered in his 2 books "Value Investing: A Balanced Approach" and "The Aggressive Conservative Investor"

Finally, we need to look at the quality of companies. I attended a Stanford course on value investing by Kenneth Jeffrey Marshall as well as his advanced value investing course. The take home message from his book "Good Stocks Cheap: Value Investing with Confidence for a Lifetime of Stock Market Outperformance" is that good companies are hard to find and even if you find one, it's hard to justify the valuation. So thanks to Covid-19, I managed to buy some good stocks in Singapore when prices fell. This style of investing is hard to implement as it is dependent on crises bringing valuation down to reasonable from fully valued. The best book I read is the 2nd edition of "Value Investing: From Graham to Buffett and Beyond" by Prof Bruce Greenswald. In summary, what makes you think you are on the right side of the trade when you buy or sell a stock and to do well in investing is to focus on certain industries where you have more knowledge than the other market participants but there is no guarantee that you will come up right.