Jean Marie Eveillard Quotes
102 Jean Marie Eveillard Quotes
1 2 3
[In 2012] I think one of the reasons I didn’t enjoy growth investing was because it assumes the world to be perfect and certain, which it is not! Becoming a value investor allowed me to acknowledge the fact that I am uncertain about the future, so my priority is to avoid losing money, rather than to generate big returns.
Jean Marie Eveillard
[In 2012] If value investing works, which I think it does, then how come there are so few value investors out there? I think it has to do with human psychology. By being a value investor you are a long-term investor. When you are a long-term investor, you accept the fact that your investment performance will lag behind that of your peers or the benchmark in the short term. And to lag is to accept in advance that you will suffer psychologically and financially. I am not saying that value investors are masochists, but you do accept in advance that your reward, if any, will come in time and that there is no immediate gratification.
Jean Marie Eveillard
[In 2012] You need humility because you know you can be wrong, and when you admit that you stress caution by assigning a margin of safety to your investments so that you don’t overpay for them.
Jean Marie Eveillard
[In 2012] You need patience to wait until they play out because, as [Benjamin] Graham said, ‘In the short run, the market is a voting machine, but in the long run it is a weighing machine.’
Jean Marie Eveillard
[In 2012] The search for undervalued stocks beings with the idea that stocks are not just pieces of paper that are traded in the market. Every stock represents a business, which has its own intrinsic value. To determine that value, you have to estimate what a knowledgeable buyer would be willing to pay for the business in cash. It is important to understand that intrinsic value is not an exact figure, but a range that is based on your assumptions. Because you have to revise your assumptions from time to time to reflect business and market conditions, intrinsic value fluctuates over time, and it can go up or down.
Jean Marie Eveillard
[In 2012] I focused mainly on stocks that were trading at 30 to 40 percent below my intrinsic value calculations. Because the Graham approach is mostly mathematical, I sat in the office all day trying to determine companies’ liquidation value or net working capital from their balance sheets.
Jean Marie Eveillard
[In 2012] My experience also makes it difficult for me to believe in the efficient-market hypothesis, which posits that it is impossible for investors to beat the market because stock prices are always fair and reflect the most up-to-date information available to them.
Jean Marie Eveillard
[In 2012] I believe that if a stock is cheap, then investors will eventually recognize it’s value. It may take three years, five years, or even longer, but the truth is that investing requires patience, and you need a huge amount of it to see good things happen!
Jean Marie Eveillard
[In 2012] Value is a big tent. You have Graham, who does it mathematically, and you have Buffett, who made a substantial adjustment to Graham’s teaching by looking not just at the numbers, but also at the long-term prospects and quality of the business. The Graham approach was less-time consuming, and I could work on the numbers on my own. Toward the end of the 1980s, I began to hire analysts so we could apply the Buffett approach. Having more people allowed us to spend a lot of time trying to find out the major characteristics of businesses and their sustainable competitive advantage – what Buffett calls a ‘business moat.’
Jean Marie Eveillard
[In 2012] We also had to make sure their accounting systems were honest, as we had learned from experience that the numbers can’t be trusted if management intends to mislead investors.
Jean Marie Eveillard
[In 2012] I always start off my research by reading companies’ annual reports and then the footnotes to their numbers. I need to be satisfied about the integrity of the numbers and the honesty of the accounting before I look further. If there is a number that is incomprehensible, I throw the report into the wastebasket and move on. If you look at Enron’s footnotes in the 1990s, they were just incomprehensible. If investors had read those footnotes carefully, I don’t think anyone would have invested in Enron stock.
Jean Marie Eveillard
[In 2012] If a company pays a lower tax rate than its peers, we have to find out why. If there is no valid reason for a lower tax rate, then either the company is cheating the tax authorities or it is overstating its profits.
Jean Marie Eveillard
[In 2012] After I retired in 2006, I helped teach a value investing course at Columbia University. I had about 12 students, and what struck me was that 11 out of 12 thought qualitative analysis had to involve 25 pages of writing. What I tried to stress to them was that they needed to think hard and then list no more than three to four strengths and weaknesses of the business.
Jean Marie Eveillard
[In 2012] Some of the best analysts I have dealt with have enjoyed explaining complicated situations and how a company could turn itself around and so forth. I always tell them that they are smart, but the more complication they try to read into the story, the higher the probability that they will make a mistake. I tell them that there is nothing wrong with making money through simple investment ideas. After all, that’s what Warren Buffett has done for years. As he has said, he doesn’t jump over seven-foot bars; he looks for one-foot bars that he can easily step over!
Jean Marie Eveillard
[In 2012] I think a concentrated portfolio is more of a bull market phenomenon. In a bear market, if you are too concentrated, you never know what can happen to your stocks. Some people have asked me whether I just invest in my best ideas, but the truth is that I don’t know in advance what my best ideas will be, so I’d rather diversify. Besides, the beauty of our global fund was that we could invest internationally, which helped to minimize country-specific risks. With that in mind, I am not saying that you should diversify the portfolio to the extend of creating a quasi-market index.
Jean Marie Eveillard
[In 2012] I think traders and speculators call it a value trap because their holding period is too short. If the intrinsic value of a stock remains unchanged, then even if its price goes down, it is still a value stock. You can’t say that it is a trap just because your holding period is mismatched with the time it takes for the stock to recover. If you have patience, and if your analysis is right, then the market will acknowledge the stock eventually!
Jean Marie Eveillard
[In 2012] Because I became worried about the Japanese stock market in the late 1980s due to its gigantic credit boom, we sold all of our Japanese stocks in mid-1988. Some investors questioned us for pulling out from the second largest stock market in the world, but I said it’s better to take some money off the table than to participate in market mania. Obviously, I was wrong and unhappy in the next 18 months because the market went up another 30 percent, but in 1990 when the market collapsed, we owned nothing in Japan and our decision was proved logical.
Jean Marie Eveillard
[In 2012] If you lag in the first year, your clients are okay with it; if you lag again in the second year, they get nervous; and if you lag in the third year, they are gone! Our fund had total assets of around $6 billion in 1997, but by 2000 it was down to $2 billion. I was unhappy, but I constantly reminded myself that I was acting in the best long-term interests of our investors, so I had to do the right thing. When the mania was over, investors came back and praised our discipline. The fund [the First Eagle Global Fund] today has a size of close to $30 billion.
Jean Marie Eveillard
[In 2012] Monetary authorities should be careful not to let a credit boom go on too long and become too strong because a credit bust naturally follows a boom, just as night follows day.
Jean Marie Eveillard
[In 2012] We have to remember that inflation is not asset prices going up or an increase in the consumer price index or commodity prices. It is just a symptom! Inflation is the excessive supply of money and the creation of credit!
Jean Marie Eveillard
[In 2012] As the future is uncertain, my advice is to remember the importance of a margin of safety. As a value investor, you can be bottom-up all you want, but remember to pay some attention to the top-down because government policies are having a severe impact on the health of the world’s financial markets.
Jean Marie Eveillard
I’d rather lose a client than a client’s money.
Jean Marie Eveillard
1 2 3
Return from Jean Marie Eveillard Quotes to
Quoteswise.com