I've been reading Jason Zweig's new updated edition of legendary investor Benjamin Graham's classic The Intelligent Investor.
For background:
- Graham was a Wall Street/investment banker type from the early/mid-20th century, retiring from that career in the and wrote several editions of this investment classic. He is most well-known for being Warren Buffet's inspiration (don't know if they had professional connections, perhaps some Stackers know?), and very much sing that gospel: long-term view, buy securities at good price, don't trade/speculate, etc etc.
- Jason Zweig, a Wall Street Journal journalist I've followed for years, has done this sort of updating of Graham's book before—this is the 75th anniversary of the first book—and on the pages of the WSJ he is very much a broken record. Low-cost index funds, DCA into market, be wary of your own emotions, stay the course, never trade etc.
I'll have lots to say for posts in ~BooksAndArticles eventually, but for now I'm asking my ~econ tribe a very simple regime-change question: Do you think this type of value investing is outdated? Past its prime? Dead? A figment of mid-20th C fiat money?
I even found a segment where Graham himself seems to admit as much. (Page number in comments)
Every investment formula eventually falters, he says, often because it was shown to never have been sound at its core or—as I learned studying the efficient market hypothesis literature and factor returns (also, Graham's second point below implies as much)—that publishing formulas and/or acting on them quickly dissipates the excess returns they may have once discovered.
...the passage of time brings new conditions which the old formula no longer fits...
That's exactly what I'm considering now. Buffet is an infamous bitcoin critic, once saying he wouldn't buy all the bitcoin in the world if offered to him, even for a pittance, because "what would I do with them?"
(see my 2022 article for Bitcoin Magazine). Graham certainly wouldn't touch the orange coin, chalking it (and its supporters' staunch beliefs) up to new era speculative fevors.
Does bitcoin's extreme excess returns—and the very different monetary regime it promises if/when it takes over the world—undermine these principles? Is value investing timeless, or just something that worked well for a few decades of late-stage fiat collapse?
From the point of view of inside the bitcoin "new era bubble" it's hard for me to see why that idea would be wrong, but I do think bitcoin breaks most/all models and approaches like these will just fade into history's vast dustbin.