What value investing is

"All we're trying to do is find businesses we think we can understand, where we like the people running them, and where the price makes sense in relation to the future economics."

All we're trying to do is find businesses we think we can understand, where we like the people running them, and where the price makes sense in relation to the future economics.

Value investing means buying a business for less than it is worth.

Not a ticker, a business: one with revenue, cash flow, debt and a competitive position. The gap between what you pay and what the business is worth is the margin of safety, and it is what protects you when you are wrong - which happens to everyone.

Buying a stock is not a bet on whether the price will go up or down tomorrow: it is buying a small stake in a real business, with the expectation that over time the price will reflect what the business is truly worth. Value investing accepts that the market can be wrong in the short run - sometimes for months, sometimes for years - and bases its decision on the business's value, not on its chart.

On Fondamentix this approach translates into two numbers you find on every company page: the estimated fair value, meaning how much we think the business is really worth, and the margin of safety, meaning how much of a discount you are getting against that estimate. They are not a price forecast, but a starting point for deciding whether today's price makes sense.