Key Principle No. 14

Stay calm – have confidence in your process.

Anticipate years (yes, I mean two and maybe more) of relative under-performance.  Value investing is not a magic potion, promising consistently better than the market returns.  When these bad stretches occur, it is critically important not to change your process.

Obviously, this is easier to say than it is to do.  Over long careers professional value investors will sometimes lose their jobs. When this occurs, it should be seen as a badge of honor.  Extreme career risk is a major reason so few institutional investors are real value investors.  It is so much easier to mirror the indices and earn a nice consistent salary.

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