Every thoughtful investor should reflect on his own investment philosophy from time to time. This typically happens when his investment approach has been challenged by the market. Are my principle assumptions still valid? Have there been structural changes? Any sound investment strategy should have an economic and philosophical foundation which aims to achieve its long-term goals.

Our “genre” of value investing has been “out of style” for the longest duration in decades. We therefore pose ourselves the question: Will value investing still work in the future? Has slow growth, quantitative easing, and negative interest rates, coupled with demographic trends, moved the investing environment towards highly successful asset-light business models and thereby permanently disadvantaging business models which are asset intensive? Are asset intensive companies and sectors doomed and therefore rerated by the market permanently? To put it differently: Does the new economy negate some or many of the value investor’s principle underpinnings? It all depends on how you define value!

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