Is value investing by itself a worthy investment philosophy, or is it essential to marry it to some form of technical analysis or market forecasting?
I tell people to look at all the information you can. You can't let crunching numbers override common sense. That's why gathering information and just understanding what's going on in the world is very important. For a value investor, or any investor, you need to be informed … Gold is a good example. I would say that if you looked at everything going on there, at some point you have to say gold is overvalued, because it can only go up so far. It can only serve so far as an insurance against currency risk.
You mention value investing's godfather, Benjamin Graham, in a chapter called Virtues and Vices of Graham's Philosophy. What are some of the vices you mention?
Graham was too cautious for contemporary times. He had gone through the crash and the Great Depression, and for instance, he was very interested in IBM, but he wouldn't do it because it was a new technology and it scared him. I think we have to get over that today, because we're in a world of technology. We have to learn about it.
The other thing that was different for Graham was that he went through a very, very long time where there were a lot of undervalued securities. It made it easier for him to find deep, deep discounts. We're not always going to be able to operate in the same climate that he did. The other thing was he would buy regardless of quality if he thought it was undervalued. I don't encourage most people to do that. Most readers need a little more long-term stability than that. And that type of investing almost requires you to be a professional investor. You have to know a lot.