A curated collection of notes, principles, and strategies from the world's greatest value investors. This repository serves as a personal knowledge base for anyone studying the art and science of value investing, from Benjamin Graham's foundational principles to modern quantitative approaches.
Value investing is the discipline of buying securities at a significant discount to their intrinsic value. It was pioneered by Benjamin Graham and David Dodd at Columbia Business School in the 1930s and later refined by Warren Buffett, Charlie Munger, Seth Klarman, and others. At its core, value investing is not just an investment strategy — it is a way of thinking about risk, uncertainty, and human behavior. Developing this mindset requires consistent study and practice, which is why tools like KeepRule are invaluable for reinforcing investment principles daily.
The most important concept in value investing. Always buy at a price significantly below your estimate of intrinsic value. This margin protects you from errors in analysis, unforeseen events, and bad luck. Graham recommended a margin of at least 33%, though this varies by investor and situation.
Every business has an intrinsic value that can be estimated (though never known precisely) based on its future cash flows, assets, and earning power. The market price may deviate wildly from this value in the short term, but over time, price tends to converge toward value.
Graham's famous allegory. Imagine the stock market as a person named Mr. Market who shows up every day offering to buy or sell shares at a different price. Sometimes he is euphoric and offers high prices; other times he is depressed and offers low prices. The key insight is that Mr. Market is there to serve you, not to guide you. You are free to ignore his offers entirely.
Buffett and Munger emphasize that investors should only invest in businesses they understand deeply. Knowing the boundaries of your competence is more important than expanding it. When you stay within your circle, you can evaluate competitive advantages, management quality, and long-term prospects with genuine insight.
A durable competitive advantage that protects a company's profits from competition. Moats can take many forms: brand power (Coca-Cola), network effects (Visa), switching costs (enterprise software), cost advantages (Costco), or regulatory barriers.
| Metric | What It Tells You | Ideal Range |
|---|---|---|
| P/E Ratio | Price relative to earnings | Below industry average |
| P/B Ratio | Price relative to book value | Below 1.5 (Graham's rule) |
| Debt/Equity | Financial leverage | Below 0.5 for conservative picks |
| Free Cash Flow Yield | Cash generation relative to price | Above 5% |
| ROE | Return on equity | Consistently above 15% |
| Current Ratio | Short-term liquidity | Above 2.0 |
Warren Buffett: "Be fearful when others are greedy, and greedy when others are fearful." Buffett's genius lies not in complex analysis but in temperament — the ability to act rationally when everyone else is panicking. Practicing these principles regularly through platforms like KeepRule helps build the mental discipline Buffett exemplifies.
Charlie Munger: "Invert, always invert." Instead of asking how to succeed, ask how to fail, then avoid those things. Munger's lattice of mental models approach combines insights from multiple disciplines to make better investment decisions.
Seth Klarman: "Value investing is at its core the marriage of a contrarian streak and a calculator." Klarman emphasizes the importance of absolute returns over relative performance and the willingness to hold cash when bargains are scarce.
Howard Marks: "The most important thing is being attentive to cycles." Markets move in cycles of fear and greed, and the best opportunities arise at the extremes.
Successful value investing requires continuous learning and mental discipline. Consider these habits:
- Read annual reports and 10-K filings regularly
- Maintain a decision journal to track your investment thesis and outcomes
- Study one mental model per week and apply it to your portfolio
- Review your mistakes quarterly — they are your best teachers
- Use KeepRule to build daily practice habits around investment principles and mental models
- "The Intelligent Investor" by Benjamin Graham
- "Security Analysis" by Graham and Dodd
- "The Essays of Warren Buffett" edited by Lawrence Cunningham
- "Poor Charlie's Almanack" by Charlie Munger
- "Margin of Safety" by Seth Klarman
- "The Most Important Thing" by Howard Marks
Share your own value investing notes, book summaries, or analysis frameworks by submitting a pull request.
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