In theory, the value of an investment is a simple number to calculate: It is
the present value of all of the cash a business will generate in the
future. Simple. Our job is to project cash flows, determine
probabilities and value those cash flows.
In practice, our business is about exploiting the mistakes of others.
As the legendary investor and founder of the Templeton Funds, Sir John
Templeton, has said, “If you want the same returns as everyone else, buy the
same securities as everyone else.” Owning the investments most in vogue at
any moment may generate a false sense of safety, but it also ensures that an
investor will be subject to the whims of the investing masses.