“Never invest in any idea you can’t illustrate with a crayon.”
Get your Free
financial review
The title of fund manager Richard Oldfield’s book is ‘Simple But Not Easy’. That reference to simplicity if not ease in investing will be our central theme this week. In his appendix to ‘The Intelligent Investor’, published in 1984, Warren Buffett wrote:
“..the secret has been out for 50 years [ever since Ben Graham first published ‘Security Analysis’ and then followed up with ‘The Intelligent Investor’], yet I have seen no trend toward value investing in the 35 years that I’ve practised it. There seems to be some perverse human characteristic that likes to make easy things difficult.”
And the multi-millionaire trader Richard Dennis once remarked:
“I always say that you could publish trading rules in the newspaper and no one would follow them.”
Whether you’re a value investor like Ben Graham or Richard Oldfield, or a trend-following trader like Richard Dennis, sound investment principles aren’t difficult to understand – just difficult to implement. As the value manager Peter Cundill once wrote:
“The most important attribute for success in value investing is patience, patience, and more patience. The majority of investors do not possess this characteristic.”
The fault is not in our stars but in ourselves. Most people are simply too impatient to follow tried and tested pathways to long-term investment success. Making a quick buck is often far too alluring. This is ironic, given that practically all of us are investing for the long term.
Good advice rarely changes
We’re no great fans of financial journalists in general, but we make an honourable exception for Jason Zweig – personal finance columnist for ‘The Wall Street Journal’.
Zweig describes his mission as follows: “My job is to write the exact same thing between 50 and 100 times a year in such a way that neither my editors nor my readers will ever think I am repeating myself.”
As Zweig puts it, good advice rarely changes whereas markets change constantly:
“The temptation to pander is almost irresistible. And while people need good advice, what they want is advice that sounds good.”
Zweig sees his role as betting on regression to the mean while most investors, and financial journalists, are betting against it. Zweig tries to discourage his readers from chasing the latest hot trend and to think instead about investing in what is unpopular:
“Instead of pandering to investors’ own worst tendencies, I try to push back. My role is also to remind them constantly that knowing what not to do is much more important than what to do. Approximately 99% of the time, the single most important thing investors should do is absolutely nothing.”
But advising people to do nothing is not the best way of selling column inches or filling airtime. This would tend to validate the observation made by Blaise Pascal when he suggested that all of humanity’s problems stem from man’s inability to sit quietly in a room alone.
Human beings are suckers for narrative. We love to be entertained with great stories. But problems arise when popular media, and in particular the financial media, subordinate all things to the cause of entertainment. The late Neil Postman addressed this topic in his critique of television, ‘Amusing Ourselves to Death’. We doubt if he would have been impressed by the internet.
In Peter Cundill’s autobiography, ‘There’s Always Something to Do’, he offers the following investment lessons:
- Follow your passion with conviction – success will follow. Cundill spent several years looking for some kind of edge until he discovered Ben Graham – and he was set up for life. Cundill followed Graham’s advice, as laid down in ‘The Intelligent Investor’, and ended up amassing one of the greatest long-term track records in finance, a compound annual rate of return of over 15%, for over 30 years.
- Invest on the basis of a value-oriented framework – you will make money. Perhaps not immediately, but no investment strategy offers either consistent or instant gratification. The number of successful value managers is testimony to the power of the strategy.
- Search widely for value. The wider you cast your net, the greater the chances of discovering compelling opportunities. Peter Cundill became a global investor and travelled constantly in the search for attractive investments.
- Read widely. Warren Buffett’s right-hand man, Charlie Munger, a billionaire in his own right, wrote extensively of the value in lifetime learning: “In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time – none, zero. You’d be amazed at how much Warren reads – and at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”
- Be patient. Patience, patience and more patience.
- Keep a diary. Peter Cundill maintained a detailed investment journal throughout his career which became the basis for his book. He suggested, and we absolutely concur, that the process of writing helped to clarify his thinking and allowed him to look back and assess his experience and mistakes.
- Do a yearly post-mortem. Don’t be too proud to acknowledge mis-steps. Cundill went over his various investment decisions with a view to continually try and raise his game.
One of our favourite analysts is Russell Napier. One reason is that Napier is a financial market historian (his two-day course, A Practical History of Financial Markets, is one of the most enjoyable two days we’ve spent professionally). Another is that he acknowledges, like Peter Cundill, that we are all engaged in a process of lifetime learning that never quite comes to an end. He has made the disarming remark that few other jobs pay so highly for its practitioners to learn as they go along as those in financial services.
Which is probably why we have so much antipathy to economists. We cannot think of a profession with more unwarranted vanity about how little it collectively understands. The hubris is often breathtaking. The author Satyajit Das reports this telling anecdote:
“Most economists, it seems, believe strongly in their own superior intelligence and take themselves far too seriously. In his open letter of 22 July 2001 to Joseph Stiglitz, Kenneth Rogoff identified this problem. “One of my favourite stories from that era is a lunch with you and our former colleague, Carl Shapiro, at which the two of you started discussing whether Paul Volcker merited your vote for a tenured appointment at Princeton. At one point, you turned to me and said, “Ken, you used to work for Volcker at the Fed. Tell me, is he really smart?” I responded something to the effect of, “Well, he was arguably the greatest Federal Reserve Chairman of the twentieth century.” To which you replied, “But is he smart like us?”
We came across an excellent quotation recently about economics, from the British economist Joan Robinson:
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.”
Diversify widely
This is a dual challenge today, inasmuch as a) economists are sitting at the ears of monetary policymakers and recommending untested behaviours that we are convinced will be economically disastrous in the long run, and b) much of modern investment theory is simply unfit for purpose.
But whereas there is precious little we can do to counteract a), other than advocate alternative behaviours that have much less to do with endlessly printing money just to see what happens, there is a good deal we can do to counteract the malign thinking that underpins b). To put it briefly: diversify widely, and concentrate on value, per Cundill’s explicit recommendation, wherever in the world it can be found.
Ben Hunt, formerly of Salient Partners and now at Perscient, has written some excellent commentaries with the title of ‘Epsilon Theory’. Hunt views the financial markets through the prisms of game theory and history. This may be more practical and useful than viewing the financial markets as if we were all behaving like homo economicus – that strictly rational being that doesn’t actually exist in anything other than economics text books.
With an understanding of financial market history, Hunt offers a pragmatic assessment of some of today’s macro challenges – these are not quite unprecedented times; in some senses, we have been here before:
“The New Normal turns out to be an Old Normal, or at least an Intermittent Normal, and history provides a crucial lesson for active investors seeking to ride out the current storm. Risk-On/Risk-Off behaviour is nothing new, you just have to look back before World War II. Risk-On/Risk-Off was an accepted fact of market life in the U.S. for 100 years, from at least the 1850’s all the way through the 1940’s, because the conditions that create a structure where Risk-On/Risk-Off behaviour emerges – global financial crisis + new technology + regulatory regime change – were so commonplace. We think that the Internet has changed the way we make investment decisions … imagine what the telegraph and the telephone did. We worry about central bank decisions to expand their balance sheets … imagine the concern over the creation of fiat currency and the outlawing of gold ownership. The New York Stock Exchange survived a Civil War and two World Wars quite nicely, thank you, and there were actual human investors who thrived during these decades, all without the benefit of Modern Portfolio Theory. It might behoove us to learn a thing or two from these men.
“Here’s the big lesson I’ve gleaned from reading first-hand accounts of pre-World War II investors – they were all game players. Understanding, evaluating, and anticipating the investment decisions of other investors was at least as important to investment success as understanding, evaluating, and anticipating the future cash flows of corporations. To men like Andrew Carnegie, Jay Gould, and Cornelius Vanderbilt – just to name three of the more famous investors of this time – the notion that they would make any investment without strategically considering the decision-making process of other investors would be laughable. In fact, most of their public investments were driven by the strategic calculus of “corners”, “bulges”, and “points”. These men played the player, not the cards, in almost everything they did.”
While the subjects of game-playing in the financial markets – trying to “corner” the market for silver or gold, for example – are, in 2026, now different from what they were 100 years ago, the nature of game-playing hasn’t changed, because human nature itself hasn’t changed. This is why we think a combination of value investing and trend-following approaches is so powerful. Human nature causes herding in financial markets, which bids up the prices of popular stocks and causes less popular but fundamentally attractive stocks to become cheaper and even more attractive. That is the essence of the value investment proposition.
And a similar argument holds for systematic trend-following. Human nature causes the financial markets to oscillate between cycles of greed and fear. Cycles of intensifying greed cause rising price trends; cycles of intensifying fear cause falling price trends. Systematic trend-following funds take advantage of both. When there is a lack of conspicuous price trends, trend-following managers simply sit on the sidelines, holding T-Bills.
Hunt continues:
“The secret of effective market game-playing, whether you were an investor 100 years ago or you are an investor today, is to recognize that the market game hinges on the Narrative, on the strength of the public statements that create Common Knowledge. These are the core concepts of Epsilon Theory.”
Even if the information behind a Narrative is not a deliberate lie, it may have little or nothing to do with the Narrative itself. The financial news media have to say something, and they have to be saying something all the time. So they will.
The trick is a) to identify the Narrative without b) necessarily choosing to believe the Narrative. The current Narrative of our time, we think, holds that central bankers are capable of supporting and manipulating the financial markets so as to create a controllable level of inflation. We don’t happen to accept that Narrative, but that doesn’t matter. What matters is that a sufficient number of other investors believe it. This Narrative used to comprise the saying, “Don’t fight the Fed.” Whether or not we really believe that the US Federal Reserve can support the stock market indefinitely, what matters is that enough other investors believe it can. Since this Narrative is itself becoming increasingly questioned in the eyes of the average investor, it makes sense to own portfolio protection for a period in which a growing number of investors stop believing that Narrative. Given that we are talking about the stability of the monetary system itself, the logical portfolio insurance to hold ahead of the Narrative changing is the likes of gold, silver and sensibly priced mining interests.
………….
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio – with no obligation at all:
Get your Free
financial review
…………
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks and real assets, and also in systematic trend-following funds. The fund was “Highly commended” in Investment Week’s 2026 Fund Manager of the Year Awards.
“Never invest in any idea you can’t illustrate with a crayon.”
Get your Free
financial review
The title of fund manager Richard Oldfield’s book is ‘Simple But Not Easy’. That reference to simplicity if not ease in investing will be our central theme this week. In his appendix to ‘The Intelligent Investor’, published in 1984, Warren Buffett wrote:
“..the secret has been out for 50 years [ever since Ben Graham first published ‘Security Analysis’ and then followed up with ‘The Intelligent Investor’], yet I have seen no trend toward value investing in the 35 years that I’ve practised it. There seems to be some perverse human characteristic that likes to make easy things difficult.”
And the multi-millionaire trader Richard Dennis once remarked:
“I always say that you could publish trading rules in the newspaper and no one would follow them.”
Whether you’re a value investor like Ben Graham or Richard Oldfield, or a trend-following trader like Richard Dennis, sound investment principles aren’t difficult to understand – just difficult to implement. As the value manager Peter Cundill once wrote:
“The most important attribute for success in value investing is patience, patience, and more patience. The majority of investors do not possess this characteristic.”
The fault is not in our stars but in ourselves. Most people are simply too impatient to follow tried and tested pathways to long-term investment success. Making a quick buck is often far too alluring. This is ironic, given that practically all of us are investing for the long term.
Good advice rarely changes
We’re no great fans of financial journalists in general, but we make an honourable exception for Jason Zweig – personal finance columnist for ‘The Wall Street Journal’.
Zweig describes his mission as follows: “My job is to write the exact same thing between 50 and 100 times a year in such a way that neither my editors nor my readers will ever think I am repeating myself.”
As Zweig puts it, good advice rarely changes whereas markets change constantly:
“The temptation to pander is almost irresistible. And while people need good advice, what they want is advice that sounds good.”
Zweig sees his role as betting on regression to the mean while most investors, and financial journalists, are betting against it. Zweig tries to discourage his readers from chasing the latest hot trend and to think instead about investing in what is unpopular:
“Instead of pandering to investors’ own worst tendencies, I try to push back. My role is also to remind them constantly that knowing what not to do is much more important than what to do. Approximately 99% of the time, the single most important thing investors should do is absolutely nothing.”
But advising people to do nothing is not the best way of selling column inches or filling airtime. This would tend to validate the observation made by Blaise Pascal when he suggested that all of humanity’s problems stem from man’s inability to sit quietly in a room alone.
Human beings are suckers for narrative. We love to be entertained with great stories. But problems arise when popular media, and in particular the financial media, subordinate all things to the cause of entertainment. The late Neil Postman addressed this topic in his critique of television, ‘Amusing Ourselves to Death’. We doubt if he would have been impressed by the internet.
In Peter Cundill’s autobiography, ‘There’s Always Something to Do’, he offers the following investment lessons:
One of our favourite analysts is Russell Napier. One reason is that Napier is a financial market historian (his two-day course, A Practical History of Financial Markets, is one of the most enjoyable two days we’ve spent professionally). Another is that he acknowledges, like Peter Cundill, that we are all engaged in a process of lifetime learning that never quite comes to an end. He has made the disarming remark that few other jobs pay so highly for its practitioners to learn as they go along as those in financial services.
Which is probably why we have so much antipathy to economists. We cannot think of a profession with more unwarranted vanity about how little it collectively understands. The hubris is often breathtaking. The author Satyajit Das reports this telling anecdote:
“Most economists, it seems, believe strongly in their own superior intelligence and take themselves far too seriously. In his open letter of 22 July 2001 to Joseph Stiglitz, Kenneth Rogoff identified this problem. “One of my favourite stories from that era is a lunch with you and our former colleague, Carl Shapiro, at which the two of you started discussing whether Paul Volcker merited your vote for a tenured appointment at Princeton. At one point, you turned to me and said, “Ken, you used to work for Volcker at the Fed. Tell me, is he really smart?” I responded something to the effect of, “Well, he was arguably the greatest Federal Reserve Chairman of the twentieth century.” To which you replied, “But is he smart like us?”
We came across an excellent quotation recently about economics, from the British economist Joan Robinson:
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.”
Diversify widely
This is a dual challenge today, inasmuch as a) economists are sitting at the ears of monetary policymakers and recommending untested behaviours that we are convinced will be economically disastrous in the long run, and b) much of modern investment theory is simply unfit for purpose.
But whereas there is precious little we can do to counteract a), other than advocate alternative behaviours that have much less to do with endlessly printing money just to see what happens, there is a good deal we can do to counteract the malign thinking that underpins b). To put it briefly: diversify widely, and concentrate on value, per Cundill’s explicit recommendation, wherever in the world it can be found.
Ben Hunt, formerly of Salient Partners and now at Perscient, has written some excellent commentaries with the title of ‘Epsilon Theory’. Hunt views the financial markets through the prisms of game theory and history. This may be more practical and useful than viewing the financial markets as if we were all behaving like homo economicus – that strictly rational being that doesn’t actually exist in anything other than economics text books.
With an understanding of financial market history, Hunt offers a pragmatic assessment of some of today’s macro challenges – these are not quite unprecedented times; in some senses, we have been here before:
“The New Normal turns out to be an Old Normal, or at least an Intermittent Normal, and history provides a crucial lesson for active investors seeking to ride out the current storm. Risk-On/Risk-Off behaviour is nothing new, you just have to look back before World War II. Risk-On/Risk-Off was an accepted fact of market life in the U.S. for 100 years, from at least the 1850’s all the way through the 1940’s, because the conditions that create a structure where Risk-On/Risk-Off behaviour emerges – global financial crisis + new technology + regulatory regime change – were so commonplace. We think that the Internet has changed the way we make investment decisions … imagine what the telegraph and the telephone did. We worry about central bank decisions to expand their balance sheets … imagine the concern over the creation of fiat currency and the outlawing of gold ownership. The New York Stock Exchange survived a Civil War and two World Wars quite nicely, thank you, and there were actual human investors who thrived during these decades, all without the benefit of Modern Portfolio Theory. It might behoove us to learn a thing or two from these men.
“Here’s the big lesson I’ve gleaned from reading first-hand accounts of pre-World War II investors – they were all game players. Understanding, evaluating, and anticipating the investment decisions of other investors was at least as important to investment success as understanding, evaluating, and anticipating the future cash flows of corporations. To men like Andrew Carnegie, Jay Gould, and Cornelius Vanderbilt – just to name three of the more famous investors of this time – the notion that they would make any investment without strategically considering the decision-making process of other investors would be laughable. In fact, most of their public investments were driven by the strategic calculus of “corners”, “bulges”, and “points”. These men played the player, not the cards, in almost everything they did.”
While the subjects of game-playing in the financial markets – trying to “corner” the market for silver or gold, for example – are, in 2026, now different from what they were 100 years ago, the nature of game-playing hasn’t changed, because human nature itself hasn’t changed. This is why we think a combination of value investing and trend-following approaches is so powerful. Human nature causes herding in financial markets, which bids up the prices of popular stocks and causes less popular but fundamentally attractive stocks to become cheaper and even more attractive. That is the essence of the value investment proposition.
And a similar argument holds for systematic trend-following. Human nature causes the financial markets to oscillate between cycles of greed and fear. Cycles of intensifying greed cause rising price trends; cycles of intensifying fear cause falling price trends. Systematic trend-following funds take advantage of both. When there is a lack of conspicuous price trends, trend-following managers simply sit on the sidelines, holding T-Bills.
Hunt continues:
“The secret of effective market game-playing, whether you were an investor 100 years ago or you are an investor today, is to recognize that the market game hinges on the Narrative, on the strength of the public statements that create Common Knowledge. These are the core concepts of Epsilon Theory.”
Even if the information behind a Narrative is not a deliberate lie, it may have little or nothing to do with the Narrative itself. The financial news media have to say something, and they have to be saying something all the time. So they will.
The trick is a) to identify the Narrative without b) necessarily choosing to believe the Narrative. The current Narrative of our time, we think, holds that central bankers are capable of supporting and manipulating the financial markets so as to create a controllable level of inflation. We don’t happen to accept that Narrative, but that doesn’t matter. What matters is that a sufficient number of other investors believe it. This Narrative used to comprise the saying, “Don’t fight the Fed.” Whether or not we really believe that the US Federal Reserve can support the stock market indefinitely, what matters is that enough other investors believe it can. Since this Narrative is itself becoming increasingly questioned in the eyes of the average investor, it makes sense to own portfolio protection for a period in which a growing number of investors stop believing that Narrative. Given that we are talking about the stability of the monetary system itself, the logical portfolio insurance to hold ahead of the Narrative changing is the likes of gold, silver and sensibly priced mining interests.
………….
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio – with no obligation at all:
Get your Free
financial review
…………
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks and real assets, and also in systematic trend-following funds. The fund was “Highly commended” in Investment Week’s 2026 Fund Manager of the Year Awards.
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