Educating Investors

The Brandes Center explores how investment opportunities evolve in global markets and offers guidance on how to make rational investment decisions more consistently.

Value Investing

Value investors constantly evaluate the relationship between price and value when making decisions to buy, sell or hold.

Over the long term, markets tend to price securities in line with their values — but not always in the short term. When prices for assets such as stocks and bonds “disconnect,” opportunities are created for courageous, patient investors who trust their analysis of business fundamentals. By constantly comparing price with value, investors may uncover tremendous opportunities for profit — and potentially limit their risk as well.

In collaboration with academics and practitioners, our research focuses on how investors may apply value investing while guarding against the damaging effects of behavioral biases in decision-making.

Value Investing Research

February 2022

Has the First Shoe Dropped

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May 2021

Market Concentration Has Been Extreme….but Not Everywhere.

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September 2019

Are Balance Sheets Wrong?

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Behavioral Finance

The efficient markets hypothesis contends prices for assets such as common stocks almost always accurately reflect the underlying business values.

However, recent work shows that security prices often reflect investor sentiment. People may become overly enthusiastic about a company and push its price well above what the business is actually worth. We’ve seen this dynamic throughout history with various “bubbles” in the United States, including housing in 2007 and internet stocks in 1999. But those bubbles can occur with individual securities as well.

People also may get fearful and drive prices well below assets’ underlying values. We saw that most recently in March 2020 at the onset of the COVID-19 pandemic. These swings in price — both up and down — create opportunities for the rational investor focused on fundamental analysis.

We think of behavioral finance as the study of decision-making applied to investing. Over the last few decades, researchers have documented a number of cognitive or emotional errors investors sometimes make when buying or selling assets. By investigating such mistakes, we strive to raise awareness of their wealth-damaging potential. We also seek to offer tools and tactics to help investors avoid such mistakes with future decisions.

At The Brandes Center, our goal is to leverage existing behavioral finance research or sponsor new studies in order to share practical guidance that helps investors make rational decisions and build wealth over the long term.

Behavioral Finance Research

July 2022

Couples Financial Risk

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December 2021

The Murtha Perspective

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November 2021

Countering Behavioral Biases in Meetings

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Long-Term Thinking

In his book, The Intelligent Investor, Benjamin Graham wrote, “The true investor scarcely ever is forced to sell his shares.” Graham, widely considered the father of value investing, was underscoring the importance of a patient approach to investing in stocks and bonds. He added that by succumbing to short-term swings in markets, an investor could transform “… his basic advantage into a basic disadvantage.”

Investigating business values and holding positions with a long-term perspective distinguishes the investor from the speculator. But are Graham’s tenets still applicable?

The Brandes Center seeks to compare and contrast short- and long-term perspectives, weighing advantages and drawbacks of both in areas such as risk management, asset allocation and alpha generation.

Long-Term Thinking Research