Behavioral Value Investing

Traditional value investors would tell you that the most important aspect to investing in the stock market is to find businesses with significant cash flows, a solid return on invested capital, low debt to income, among other more traditional financial metrics that signify business health. However, a lot of investors miss out on the other very important variable in the sound investment equation, and that is understanding market psychology. Here at Creekside we understand that in very inefficient markets and in all aspects of life there are 2 fundamental principals, that value is subjective and it’s cyclical. A great idea can turn sour in the midst of changing market sentiment. This is why we must understand the herd, not to invest along side them in the next high flying tech stock, but as another data point so we can be sure to invest with the most optimized return possible. You can see below how our approach has done for us so far.