The points here are summarised from an interview with Bob Torray (Robert E. Torray & Co.) conducted by Kirk Kazanjian in his book Wizards of Wall Street.
What have you learned over the years? How has your investment approach matured?
- It is a tough way to make a living by investing in obscure companies, special situations and turnarounds, and trying to take advantage of market cycles. My experience over several decades convinced me that I should forget about all of that.
- It wasn’t that we didn’t make money, we actually did very well. But I now believe that we could have done about the same, and certainly better after taxes, with less effort, uncertainty, and risk, by simply buying first-rate businesses run by top-notch management and hanging onto them for the long haul.
- To put it another way, early on I was playing the stock market, trying to buy low, sell high, capitalize on turnarounds, breakup values, and so on. Today, I don’t trade at all.
Some other question…
- The value of a business is related to the stream of earnings it generates. The share price will reflect those earnings but cannot alter them. We want to buy at a fair price.