The Challenge of Investing
Summary:
- For decades, value investment has been seen as the top investment strategy, embraced by Warren Buffett.
- However, those relying on value investing have had both their ups and downs, suggesting the strategy is not perfect.
- Furthermore, dating all the way back to 50-s, it does not account for the new technologies and artificial intelligence.
- Today, hedge funds and private investors have been able to persistently generate tremendous returns by utilizing AI in their trading.
- Algo-trading is a great way to enhance informed human decision-making and optimize the investment strategy.
Value Investing
Benjamin Graham’s The Intelligent Investor is a book heralded by many, including Warren Buffett, as the best book on investing that has ever been written. The book covers the history of the stock market in the United States and discusses why so many people fail to make money. Buffett, who has achieved a 20.9% annualized gain from 1964 to 2017, practices the theory of “value investing” that was taught to him by Graham. Value investing, as defined by Graham, is “An investment operation in one which, upon thorough analysis, promises safety of principal and an adequate return.”
