started the Brandes Investment Partners firm in 1974, and managed $121.7 billion as of September 2007. He manages multiple portfolios including US equity and Global Equity. Charles Brandes
is listed as #488 in the Forbes List of World’s Richest People with a net worth of $2 billion. He is author of the book Value Investing Today
. As a value investor, Brandes seeks to purchase out-of-favor securities that are trading at discounts to their intrinsic values, and then hold them until the market recognizes their true worth. Charles Brandes
is a disciple of Benjamin Graham. His value equity fund has beaten the market in the past 15 years. His investing discipline has been summarized in his article 10 Core Beliefs
: prices fluctuate, have an long term perspective, owning stock is owning the business, don’t let emotions misguide you, focus on the company not on the market, sell when better opportunities come along, “under-performance is inevitable”, and patience is golden.
His buy & hold brochure
shows earnings comparison between short-term “opportunistic” investor with a 1.9% rate of return and the S&P500 with an 8% rate of return for 22 years (page 2). His point is that “the wildness tends to fade overtime”. The market in 2008 & 2009 has been quite volatile. “Stock price fluctuations have been more severe than historical averages…daily price moves of 1%-3%...climbing or falling sharply on a regular basis, investors might be tempted to alter their investment plans. But that can be dangerous. Long-term investors might want to ask themselves if they believe recent levels of volatility will continue or revert toward longer-term averages.” Page 3 & 4 are histogram comparisons of Actual versus Expected rate of returns in the months from year 1926 to 2008 (Exhibit 2 & 3). Clearly, months with 2-5% rate of return were the most frequent; less than 1% of the time did we see 10% or higher returns/losses. Bottom-line, “Market fluctuations certainly can test investors’ long-term conviction,” and the buy-and-hold strategy wins. Continue Reading »