Being in the fortunate position of having surplus capital to invest, we believe that the primary concern for most investors is preserving their capital. While great fortunes have been gained, unfortunately, many have also been lost. During recurring periods of market turmoil, investors often face the unsettling prospect of capital loss.
We firmly believe that the consistent application of a well-defined investment strategy, grounded in robust and time-tested principles, and supported by a long-term track-record across diverse market conditions, can provide peace of mind to investors. It is much like the reassurance one might feel when sailing under the guidance of an experienced captain, someone who has weathered many storms yet has unwaveringly maintained course toward the planned destination.
Value investing is an equity investment strategy that can provide peace of mind. Its basic tenets can be summarized as follows:
Value investing, which has been actively practiced for nearly 100 years, boasts a solid track record in terms of capital preservation and generating attractive long-term returns. It is preoccupied with the most important risk we believe is really worth worrying about: the risk of permanent capital loss. One of the main causes of such losses is overpaying for a company’s shares. A value investor commits capital only when an informed estimate of a company’s value can be made, and crucially, when the company’s shares trade at a substantial discount to this estimated value. This approach significantly reduces the risk of permanent capital loss.
Value investing doesn’t shield against day-to-day price fluctuations in stock markets, nor does it claim to protect against a general market crash. Unrealized losses from these price movements are regarded as temporary, and a disciplined value investor with a multi-year perspective may eventually even profit from short-term volatility and market turmoil.
In essence, value investing offers a well-structured framework for stock investing in a risk-averse manner, allowing investors to enjoy a good night’s rest even in the face of notoriously volatile and unruly stock markets. Citadel Value Fund can help you navigate the market’s ups and downs with confidence.
For readers interested in learning more about value investing in general, we highly recommend the book “The intelligent Investor” by Benjamin Graham. Additionally, Warren Buffett’s annual shareholder letters contain a wealth of information on value investing and can be found on the website of Berkshire Hathaway.