The market's been on a wild tear lately, and I can't help wondering if we've all lost our collective minds. TSLA, RDDT, AAPL, COIN—watching these tickers is like trying to predict where a house fly will land next.
Tesla announces record deliveries? Down 5%. Reddit hemorrhages cash? Up 12%. Makes perfect sense in this funhouse mirror we call a market.
I've been covering finance for years, and lemme tell you—this disconnect between fundamentals and stock prices feels particularly unhinged right now. The frustration among traditional value investors is palpable. These folks spend weeks analyzing balance sheets only to watch their carefully researched picks get steamrolled by whatever meme stock some teenager pumped on social media.
But is value investing really dead? Not so fast.
The thing about value investing—it was never about instant gratification. Benjamin Graham didn't write "The Intelligent Day Trader" for a reason.
When I think about this question (and trust me, every financial journalist contemplates this regularly), I break market behavior into three timeframes:
Short-term is pure sentiment. Reddit forums might genuinely offer better insight than SEC filings here, as ridiculous as that sounds.
Medium-term? A brutal tug-of-war between narrative and fundamentals. Narrative's been winning lately, in case you hadn't noticed.
Long-term... well, that's where fundamentals reassert themselves with the stubborn persistence of gravity. Always have, always will.
The problem? That "long-term" keeps stretching. Back in the '70s, investors held stocks for 5-7 years on average. Today? Months. The market's developed a raging case of ADHD while value investing requires geological patience.
Look at the "Magnificent Seven" saga. Value investors warned about their stretched valuations for years. They were absolutely right—and it absolutely destroyed their performance as these stocks defied gravity. As Keynes supposedly said (though probably didn't), "Markets can remain irrational longer than you can remain solvent."
But here's where it gets interesting.
Smart value practitioners have evolved. They're not just looking at P/E ratios and dividend yields anymore. They've incorporated qualitative factors—competitive moats, network effects, optionality—into their analysis. They're finding value in places traditional screens would miss.
(Having interviewed dozens of fund managers over the past decade, I've noticed this shift accelerating, particularly among the younger value disciples.)
Microsoft under Nadella is the perfect example. By traditional metrics, it looked expensive for years. But those who recognized the value of its cloud transformation? They made a killing. That was value investing—just not your grandfather's version.
What we're witnessing isn't value investing's funeral—it's its adaptation. The core principles remain solid: buy businesses for less than they're worth, maintain a margin of safety, think like an owner not a trader. But "value" now encompasses more than simple accounting ratios.
As for today's apparent divorce from fundamentals... we've seen this movie before. The dot-com boom, 2007, 2021—periods where momentum seemed the only thing that mattered. Each ended with the market's equivalent of a hangover, reminding everyone that cash flows eventually matter.
So does value investing still work? Yes—with asterisks. It works over truly long horizons. It works when your definition of "value" includes future growth potential. And it works best when combined with an understanding of market psychology and liquidity flows—factors Graham and Dodd never contemplated.
For investors watching TSLA and RDDT with bewilderment, perhaps the answer isn't abandoning value principles but supplementing them. Understanding sentiment isn't selling your soul; it's acknowledging the terrain has shifted.
The market will always swing between fear and greed. Value investors who maintain discipline while updating their toolkit will find opportunities—even if vindication takes longer than it used to.
After all, dinosaurs ruled Earth for 165 million years. That's a pretty good run, extinction notwithstanding.
