Kass: Chase Value, Not Price

This blog post originally appeared on RealMoney Silver on May 14 at 7:36 a.m. EDT.

One day a hare saw a tortoise walking slowly along and began to laugh and mock him. The hare challenged the tortoise to a race, and the tortoise accepted. They agreed on a route and started off the race. The hare shot ahead and ran briskly for some time. Then seeing that he was far ahead of the tortoise, he thought he'd sit under a tree for some time and relax before continuing the race. He sat under the tree and soon fell asleep. The tortoise, plodding on, overtook him and finished the race. The hare woke up and realized that he had lost the race. The moral, stated at the end of the fable, is, "Slow and steady wins the race."

-- Aesop, "The Tortoise and the Hare" (Wikipedia summation)

In my professional investment career, since graduating The Wharton School in 1972, I have seen multiple bull- and bear-market cycles. And, almost without fail, I have observed that far too many investors worship, trade and invest at the altar of price momentum, though their investment strategy is framed (publicly and sometimes disingenuously) on fundamental grounds.

While momentum trading has its benefits and can produce superior investment returns, it is not for me.

I am by no means an investment purist -- "I don't want to make friends; I just want to make money!" -- but buying high and selling higher is not in my investment bag. Unlike, Jim "El Capitan" Cramer, I am no good at it.

Rather, I prefer to stick to the discipline of interpreting fundamentals, valuation and sentiment through a logically reasoned, objective and analytical process. This means that I maintain the self-control of sitting on my hands, selling and/or shorting when values are rich and buying (even recklessly sometimes) when values emerge as they did two months ago.

This is, however, easier said (or written) than done. It requires patience and, at times, a variant or contrarian view and strength of analytical conviction. It often also requires one to ignore the business media's staccato repeated sound bytes of bullish breathlessness. Their intentions might be honorable, but quite frankly, the media, with few exceptions, have no or little skin in the game. And it often requires market participants to ignore the delivery of the talking heads whose platform is the media and whom are too frequently theatrical and shallow in their "advice" rather than substantive in their analysis.