Charles Brandes, well-known investor and founder of Brandes Investment Partners, has made some bad picks during his more than 40 years in finance, and he’s proud of them.
Brandes told a group of Fordham University students who attended the businessman’s talk on value investing on Sept. 9 at the Flom Auditorium on the Rose Hill campus that investors should not be ashamed of the occasional bad choice.
“And I’m serious about that, because if you don’t make bad investments, then you’re not doing what you should do,” he said.
Brandes paraphrased another investor’s advice on the issue of mistakes, saying they are the price paid when striving for excellence.
“If you’re not willing to take some fundamental risk, then you can’t be superior,” he said.
Brandes, whose talk was sponsored by the Gabelli Center for Global Security Analysis, began his career in 1968 as a broker trainee and founded his firm in 1974. The company managed $26.4 billion in assets as of the end of 2014. His book, Brandes on Value, discusses value investing, the practice of buying stocks in businesses that trade for less than their intrinsic value.
A follower of legendary investor Benjamin Graham’s theories on investment, Brandes told students to beware of treating the markets as simply a zero-sum game in which there are only winners and losers.
“You should own things that create new wealth,” he said. “That is the best thing you could do for your career, not do zero-sum games, not worrying about short-term stock price movements.”
Investing wisely in equities, Brandes said, has proven to be a successful strategy. An initial investment of $100 in 1977 would have yielded nearly $6,000 by June 2015, Brandes said. Investing the same amount in bonds would have yielded only $1,478.
Patience, he said, is key.
“You use time, as an investor, to smooth out the inevitable short-term events that we’re seeing now, and all the ups and downs that we see all the time,” Brandes said, “and that’s how you build fundamental wealth.”