Investing in sectors versus investing in value in 2006

by Ashik Shah on 31 July 2006

Investors in Kurm are interested in the preservation and development of individual and family wealth over generations. The results for this quarter indicate the benefits of a conservative value–driven approach: Kurm has managed to maintain value while markets have fallen significantly.

Investors remain weary after the shocks of the technology bubble and then recent movements in emerging markets. In UK property today, the current yield creates doubt, as do high valuation multiples, fuelled by debt in private equity. Investors often try to allocate funds by economy or industry or asset class to enhance returns, attempting to catch the latest trend or fad. However, Kurm’s approach echoes the statement of Warren Buffett: “For me, it’s what’s available at the time. We’re not interested in categories per se. We’re interested in value.”

The investor needs to make his money work for it to grow and for his wealth to compound and not be eroded by inflation, and today’s markets are quite disheartening. I turn again to Warren Buffett: “The market is only there as a reference point to see if anybody is offering to do anything foolish. When we invest in stocks, we invest in businesses.”

Regardless of the market situation, an investor in well selected stocks, with good business economics and honest management, conservatively purchased below their intrinsic value, will succeed in preserving and growing his capital over the long run.

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The views expressed and comments made on this website are not personal advice based on your circumstances. The purpose of this website is to provide information and analysis to help you make your own informed investment decisions. If you are not confident making your own investment decisions you should contact a firm which is authorised and regulated by the Financial Conduct Authority (such as Ashik Shah & Co. Ltd.) so that a qualified financial adviser, after considering your personal circumstances and investment objectives, can make personal recommendations of investments which are suitable for you. Whether you make your own investment decisions or prefer to follow the recommendations of a financial adviser you should always remember that your capital will be at risk and that investments can go down in value as well as up.

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