Introduction and Lessons Learned

Hello,

My name is George Thoreson and I am a fundamental, bottom-up, value investor.  I love investing. I’ve been investing and studying investing since 1975.

I’ll invest in large and small capitalization companies, often out of favor or in a special situation.  Searching for real value often leads to interesting places including companies with small market capitalizations, ones that are out of favor or ignored for many possible reasons. Historical evidence presented by Tweedy, Browne Company, LLC for one, studies and my own experience show that companies with the highest rate of appreciation potential are most often undervalued and smaller capitalization companies.

I’ve been investing for about 35 years, starting when I was about twenty-seven years old with a Bachelor of Science Degree from Penn State University and a Masters in Business Administration from Clarion University.  More recently I studied under Dr. George Athanassakos’ in his excellent seminar at the Executive Value Course at the Ben Graham Centre for Value Investing at The University of Western Ontario.

My business career progressed reasonably well with a large corporation in economics, planning, operations, technical, and business development.   After spending most of my career in these different roles, I opted for early retired (fifty years old) to pursue other interests including my long time goal of becoming an entrepreneur with a small business and allowing for more time to invest. This real world business experience provides insights helpful in investing.

My investing career did not go so smoothly. We learned the Efficient Market Theory, popularized at the time and still prevalent. This theory assumes information about a company or investment is known to all investors and immediately reflected in the stock’s price. The average investor cannot “beat the market” because the stock price changes immediately to reflect the good or bad news (that everybody knows) so you cannot buy or sell it at an advantage because the market is so efficient.

Three Lessons Learned:

It took more years than I want to admit before I gave up on the Efficient Market Theory (EMT) or Hypothesis (EMH) and became a good investor. The EMT has just enough truth to have some credibility but not enough to be useful.  The problem is it discounts human nature and the emotions like fear and greed that often drive the markets.  It assumes everyone will know exactly what to do with the information and are capable of acting on it immediately in a totally rationale manner.  Does that sound like the real world to you? This just doesn’t always happen in the world where I live.  Further how would this theory explain the long success of Warren Buffett and many other value investors?

Another tough lesson I learned during this period was no one cares more about your money than you do. I would rely on Wall Street’s advice (often based on efficient market theory) only to be disappointed because there were just too many other interests in our money before our well-being is fully considered.  Don’t get me wrong, I know there are some excellent money managers and advisors out there but most have a value orientation.

Eventually through studying successful investors and learning from my own mistakes the success of value investing over the long term became apparent. After I became a value investor (and my own money manager) my results became much better, even in tough markets.  That led to one more lesson, never stop learning.

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